Nicola Sharp of financial crime specialists Rahman Ravelli believes change is overdue.
The UK's Financial Conduct Authority has announced a consultation to see how it can tackle illegal behaviour in the financial services market.
Having stated that there have been too many scandals in Britain's financial services, the Financial Conduct Authority (FCA) has said there is a need for input on how to ensure the consumer investment market works as well as possible. The FCA wants to determine if existing rules can tackle the problems, which other authorities could help and whether it should seek more powers from the government.
FCA Interim Chief Executive Christopher Woolard admi_ed that "the consumer investment market is not working as well as it should", with too many consumers being offered unsuitable products or advice, which leads to a lack of confidence in the investment market.
Feedback received by the FCA will be used to shape the way it works over the next three years. One issue it is already considering is making a firm that gives bad advice pay the resulting compensation bill. At present, every firm pays towards the Financial Services Compensation Scheme (FSCS), which manages such payments. The FCA is assessing whether firms should hold more capital based on the risks they pose or whether firms carrying greater risk should contribute more to the FSCS.
The FCA also believes more safeguards may be needed because consumers are now using various placorms to buy financial products.
While the scale of the losses that are being suffered by the public through scams and fraud is staggering, it should be emphasised that this is nothing new. The way the FCA deals with problems as they arise and supports those who suffer the losses has been in need of change for a considerable amount of time.
There is certainly a case to be made for focusing on who pays what into the FSCS to compensate those adversely affected. But the main emphasis needs to be on what the FCA should be doing to effectively safeguard, supervise and regulate those under its remit. What can be done to bolster its existing powers is certainly an issue that requires immediate attention.
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