Plans to ditch FSA are dragging behind schedule

Plans to replace the FSA with a new regime are falling well behind schedule. A new financial policy committee, set up inside the Bank of England to act as a City watchdog, should have met last autumn. But its members have not yet even been appointed.

Although the FSA is due to be abolished next year, the Treasury select committee has voiced fears that the Government will now play catch-up in order to get the original timetable back on track.

The committee has warned of ‘undue haste’ if that happens and has cautioned against the Government pushing through its plans at speed.

Legislation is likely to take longer to pass through Parliament than was expected.

The Council of Mortgage Lenders did not object to the slowly-slowly approach. It welcomed the Treasury committee’s view that the authorities should take enough time in introducing reforms to ensure that rules are “effective but proportionate”.

The CML agrees that “it is more desirable that the Government gets these reforms right than sticks to an arbitrary timetable”.
 
It warned that urgency could be counter-productive, increasing the risk that initial reforms could require further changes later, with unnecessary additional costs. The CML also said it is concerned that current proposals contain little information about costs.
 
CML director general Michael Coogan said: “The Treasury committee has introduced a welcome dose of common sense into the debate about the future of regulation.

“It is essential that we take the time to introduce the right reforms, and strike the right balance between protecting consumers and ensuring they have access to mortgages at a reasonable cost.”