Benefits of financial services regulation must not be lost in debate on costs

28 June

The Consumer Panel today called on the FSA and the financial services industry to acknowledge the benefits of regulation for consumers of financial services as the FSA publishes research carried out jointly with the Financial Services Practitioner Panel on the costs of regulation.

The Chairman of the Financial Services Consumer Panel, John Howard said:

"The incremental costs of regulation appear to be not as high in each sector as some had feared. It is not surprising that the report shows that there were higher incremental costs of regulation in the retail sector covering investment and pension advice. This is where improvements in regulation and compliance are being made and continue to need to be made. There is a history of misselling to retail consumers which needs to be rooted out, and the regulator is star ting to increase confidence in the sector. However, although senior management in firms seem to understand the importance of regulation, there is still a problem that on the high street, consumers continue to face poor advice and information which the regulator must do more to improve.

These figures seem to counter the argument that strong regulation will undermine business. Consumers who have confidence in a strong regulatory system will be more willing to invest, and an effective and efficient regulator appears to be an international asset, drawing more firms to the UK and also increasing the country's lead in financial services."

Notes to editors

1. The Financial Services Authority has today published its 'Better Regulation Action Plan (BRAP) Progress Report'. This is accompanied by three pieces of independent research into: the incremental costs of complying with individual FSA rules in three sectors; an estimation of the administrative costs to firms of providing information to the FSA; and a framework for identifying and measuring the benefits of financial regulation. Details of this are published on its website – www.fsa.gov.uk
   

2. The FSA established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA’s performance in meeting its objectives. The Consumer Panel has statutory status.

3. The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit. More information about the Panel's work is available on this website.

4. The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.

5. There are currently eleven members of the Panel as listed below (for further information on individual members, see the Panel's website).

   John Howard (Chairman)
   Adam Phillips (Vice Chairman)
   Caroline Gardner
   Harriet Hall
   Tony Hetherington
   Stephen Locke

   Nick Lord
   David Metz
   Paul Salvidge
   Robert Skinner
   Carol Stewart