HM Treasury Financial Services<br>Future Regulatory Framework Review<br>Phase II Consultation Response

A ShareSoc news item by ShareSoc Director Cliff Weight

The fundamentals of financial regulation are under question

Recent regulatory failures (for example Woodford, the mis-selling of mini-bonds peddled by London & Capital Finance, Wellesley, and the failure to protect pensioners being pressured by advice on pension transfers from commissioned agents) have forced a welcome review of current practice. ShareSoc and UKSA are responding to make sure the interests of ordinary savers and investors are properly safeguarded.

Two separate consultations are in progress, for HM Treasury and for the Treasury Select Committee.  ShareSoc and UKSA have now responded to both. In relation to the first, entitled ‘HM Treasury Financial Services: Future Regulatory Framework Review’, we said in summary:

We are not satisfied with the quality of financial services regulation over the last 20 years, which have been marked by many regulatory failures.

We remain broadly supportive of the existing framework of primary legislation: planned for the long-term; with power to regulate located in HM Treasury; and with operational implementation – including detailed rule-making – devolved to the regulator. However this has not prevented failures arising from the following weaknesses

1. Failure to prioritise people over industries when setting objectives.
2. Regulatory bodies too close to the industry they are responsible for regulating.
3. Relying on excessively detailed rules instead of flexible application of basic principles.
4. Regulators failing to exercise the powers that they have.

Our consultation response shows how these problems can be avoided in the future. It has been submitted jointly with the UK Shareholders Association.

HMT FS Future Regulatory Framework Review – UKSA & ShareSoc response