When three become one, erm, but are really still three By Sarah Davidson


the FSa is for the chop. in his mansion House speech the week before the Budget, chancellor george osborne criticised the tripartite au- thorities and in particular the failure of the FSa to identify and prevent the financial cri- sis.


He said, after initially thinking the FSa could con- tinue under the beady eye of the Bank of england, that it had become necessary to bring regulation of financial services under one roof. He then went on to announce the establishment of “a pow- erful new consumer Protec- tion and markets authority,” which he said will “regulate the conduct of every autho- rised financial firm providing services to consumers”. “it will also be responsible


for ensuring good conduct of business in the uK’s retail and wholesale financial ser- vices, in order to preserve our reputation for transparency and efficiency as well as our position as one of the world’s leading global financial cen- tres,” he said. an independent Financial


Policy committee will also be established at the Bank of england to oversee macro- prudential regulation. Sants was out, now he’s in.


after announcing his inten- tion to bow out of the FSa, Hector Sants has agreed to stay on to head up the newly formed prudential authority and as deputy governor of the Bank of england. FSa chairman Lord turn-


er was particularly delighted. “Hector, who has done so much to transform the FSa during the past few years, has


agreed to lead the transition to the new structure in 2012,” he said. meanwhile Bank of eng-


land governor mervyn King welcomed the central Bank’s new powers saying that the


Bank of england couldn’t ef- fectively perform its role as lender of last resort without first-hand knowledge of the health of the banks to which it might provide support. King wants to avoid an


overly legalistic culture with its associated compliance- driven style of regulation. in- deed he said it was an impor- tant reason for the separation of consumer protection and market conduct.


Not basket cases... yet by


Robert Sinclair director AMI


Following the most draconi- an budget in living memory, with more changes than pos- sible for the ordinary person to comprehend, the consum- er need for advice and look- ing across the market be- comes even more important. the long awaited signal from the new government of the impending demise of the FSa may not be quite what the more vocal of the many it supervises expected. the splitting of functions be- tween the Bank of england and the new consumer Pro- tection and markets author- ity (cPma) may not lead to as decisive a change as many might foresee. 2012 will see a transfer of most of the ex- isting staff working under a new Parliamentary act. the challenge over coming months will be to lobby ef- fectively to ensure our politi- cians set the right objectives for the new authority, whilst protecting consumers. the furthering of advice, open- ness, transparency and that consumers must be more en- gaged in taking more savings


and protection products, has to be a key objective of the new entity. only through this will we build a more self sufficient economy, less de- pendent on those who can and do pay their taxes out of hard-earned income. the FSa in other sectors


(and we hope through the mortgage market review, together with recent state- ments from the FSa con- sumer Panel) emphasise the need for an open market where customers get advice, can get help to look across the market and that tied sales people can no longer hide behind their limited choice of product.


Interest rate rises should be gradual – we hope With unemployment back on the upward trend, the Bank of england remains rightly passive to inflation running well above the long-term tar- get. the governor and his monetary Policy committee still feel that it will fall within range and could even move into negative territory under some scenarios. thus the £200bn quantitative easing stays in the market and we will see base rate increased before its withdrawal. this will be to normalise markets before reversing liquidity.


the housing market con- tinues to defy expectations with £10bn per month gross lending still fuelling house price inflation. this can only be explained by the number of cash buyers and the fund- ing of larger deposits. We see a steady trickle


of new lenders both to the market and supporting ami. this is positive in deliver- ing more real competition, rather than solving capac- ity issues. any increase in base rates should be small and gradual so avoiding a rapid rush to remortgaging. We are seeing good advisers helping customers under- stand the certainty delivered by fixing rates and the flex- ibility of trackers. this is a risk appetite decision and should be accompanied by discussions on saving some of the lower repayments or through better protection. So we are not basket cases


yet. there is much to see as positive. there is even more to fight for. With good lob- bying of mPs we can get bet- ter rules for the cPma and by talking with one sensible voice we can change the FSa rules to help consumers get good mortgage advice. one voice through ami is still the best chance of seizing the prize.


mortgage introducer JULY 2010 5


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