Financial services industry sceptical on FCA

The new Financial Conduct Authority (FCA), set up at the start of April to replace the Financial Services Authority, will have a similar role in regulating financial firms that provide services to consumers.

However, UK financial services businesses are uncertain whether this change will have any impact on the sector, with a survey from the Practitioner Panel finding that three in four firms do not feel competition will be improved by the FCA.

Expectations are somewhat higher on other fronts, reports the Financial Times, with the study finding that three-quarters of those surveyed anticipate the FCA will be able to fulfil its main aim of protecting customers from business abuses.

Graham Beale, new head of the panel and chief executive of Nationwide Building Society, described this gap in what is expected for consumers and companies involved in the sector as a significant one.

He attributed some of these changes to the fact that the retail distribution review (RDR) has been implemented, setting higher standards for financial advisers and banning them from taking on commission on what they sell.

While this was intended to tidy up the industry, it has led to a number of banks stopping advertising in the mass market and independent financial advisers to quit their job.

"RDR has been quite messy ... You could see a vanilla homogenised marketplace with no product choice," warned Mr Beale, adding that smaller firms are likely to be the worst-affected by these changes.

"The smaller players are arguing very vociferously that they don't want to be treated the same way as their larger competitors," the Practitioner Panel chief concluded.

However things turn out for the FCA it is unlikely anyone in the industry will mourn the demise of its predecessor, which met with intense criticism for its actions in the build-up to the banking collapse.

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