25 January 2012
The Financial Services Consumer Panel is calling for the Bank of England’s new Prudential Regulatory Authority (PRA) to have greater accountability to consumers.
In the anticipated Financial Services Bill the PRA will assume responsibility for prudential regulation. Its remit will cover financial stability and the regulation of insurance funds, including with profits funds. While the FCA, which will regulate how business is conducted, will have a duty to consider the representations of the Consumer Panel, the PRA will not.
The Consumer Panel is concerned that this leaves a serious gap in terms of accountability. It argues that the consumer perspective will be lost when the PRA is considering matters that could strongly affect consumers such as mortgage interest caps or the distribution of funds in with profits funds.
Adam Phillips, Chair of the Consumer Panel, commented:
"The Panel is calling for the Consumer Panel to be given the same rights with regard to the PRA as it currently has with the FSA under FSMA. We are concerned that the consumer perspective will be ignored when the PRA is considering issues such as mortgage regulation or with profits funds.
It is widely acknowledged that a formal statutory relationship with the Panel has been of great benefit to the FSA. A similar relationship with the PRA would ensure consumer interests are taken into account in the new authority."
Notes to editors
- Presently, under Financial Services and Markets and Markets Act 2000 s11 guarantees that the FSA has a duty to consider the representations of the Panels.
- Adam Phillips speech at the BBA conference [PDF].
- Read the Consumer Panel’s submission to HM Treasury on regulatory reform [PDF].
- The Consumer Panel is a statutory body under the Financial Services and Markets Act 2000 and was initially established by the Financial Services Authority in December 1998. The Panel advises the FSA on the interests and concerns of consumers and reports on the FSA's performance in meeting its objectives.
- 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.