Hung parliament likely to mean extra FSA powers – AIFA

A coalition government of Labour and the Liberal Democrats would likely lead to strengthened powers for the FSA and the full implementation of the Financial Services Act, AIFA says.

The UK has its first hung parliament since 1974 after no party secured an overall majority, although the swing to the Conservatives has been significant.

AIFA director general Chris Cummings says Labour wants a strengthened role for FSA while the Lib Dems wants a reinforced role for the tri-partite system, meaning a compromise would likely be sought.

A Conservative minority government, described by AIFA as the "next most likely scenario" would likely see the Tories follow through with plans to abolish the City regulator and form a Consumer Protection Agency in its place. However, it adds it is likely the RDR and MMR "themes" would be maintained.

AIFA's views arrived before Liberal Democrat leader Nick Clegg said David Cameron had the right to form the next government because the Conservatives had won the most seats.

Cummings says there is "no doubt" Labour is more inclined to want to deal with the Liberal Democrats and says a possible Tory/Lib Dem pact would be "much harder to predict".

"The position is unclear as the Lib Dems want to retain FSA and bolster the tri-partite system, which obviously differs widely from the Tories plans," Cummings says.

"This is not the only area on which the two parties differ - it is therefore inevitable some deals would be struck, but it remains to be seen what would a deal look like and whether plans for FSA would be the bargaining chip."

Cummings says AIFA will be closely monitoring all new Cabinet appointments to ensure the IFA message is heard.

"A ‘hung parliament' means power will no longer be in Downing Street or Whitehall but will be in Parliament, where individual MPs will have a greatly enhanced role," he says.

"Given there are now a record number of new MPs in Parliament, it is therefore a crucial time for us to convey the IFA profession's key messages to these ‘first time' politicians."