Treasury Select Committee opens FCA inquiry

The Treasury Select Committee (TSC) has launched its inquiry into the Financial Conduct Authority (FCA).

In July the TSC announced in its report on the Retail Distribution Review (RDR) it would investigate the accountability of the FCA.

The FCS will form part of the new regulatory structure, along with the Prudential Regulatory Authority (PRA), which will replace the Financial Services Authority (FSA).

Chris Leslie MP, shadow financial secretary to the Treasury, has previously criticised the "twin peaks" structure of the FCA and PRA, and said it will clash with EU regulation.

TSC chairman Andrew Tyrie MP (pictured) said: "No institution, however powerful, should be unaccountable. It is particularly important that an institution as powerful as the FCA should be subject to proper scrutiny.

"Many argue much of the FSA's conduct of business regulation has been both ineffective and costly. It is vital to take the opportunity, with the creation of this new body, to do better.

"In an earlier report, the TSC has already made it clear that competition and choice should play a more central role than is currently envisaged in the government draft legislation. One of the objectives of this inquiry is to scrutinise the remit and powers of the FCA to facilitate this."

The TSC has yet to publish the deadline by which written evidence must be submitted to the inquiry.

Richard Saunders, chief executive of the Investment Management Association (IMA) said:"We welcome this inquiry. Many directly supervised firms, where consumer detriment has been rare, are required to provide vast amounts of data to the FSA every year.

"But the real problems arise elsewhere: failures of intermediaries regulated by the FSA, but not subject to direct supervision, have led to compensation costs to consumers of nearly half a billion pounds in the last three years alone.

"This strongly suggests that the present approach is not working, and that priorities need to be rethought. The new regulator will need to demonstrate that the money it charges the industry adds value for consumers."