The government will authorize the Consumer Protection and Markets Authority (CPMA) to prohibit distribution of retail financial products and inform investors about impending action against firms in advance.
The FT reported that Treasury Financial Secretary Mark Hoban has said the CPMA – to be renamed as Financial Conduct Authority (FCA), will be authorized to either suspend distribution of products up to 12 months or ban them completely.
The FCA will give a chance to erring firms and individuals to argue their cases in an internal appeals process, but will warn investors in advance about its intentions before proceedings are initiated.
To reign in banks, brokers and individuals, the government decided to rename the organisation indicating its emphasis on their conduct. The Treasury Select Committee had earlier this month urged the government not to promote the CPMA as a consumer champion, arguing the phrase could potentially be misleading.
FSA had published a discussion paper last month on financial product intervention, suggesting that the government needs to think of radical new ways of regulation like price cap and distribution ban of harmful products.
Hoban said FCA will be empowered to promote and monitor competition in the market and the Treasury may give it addition authority to conduct internal competition enquiries, currently the jurisdiction of Office of Fair Trading.
John Fingleton – the OFT chief executive, had told the Treasury Select Committee that there should be a legal objective for promoting fair competition.
Martin Wheatley, the outgoing chief executive of Hong Kong’s financial regulator, was appointed the chief executive of CPMA, earlier this month.
Mr. Wheatley will join as the Managing Director of FSA’s Consumer and Markets business division in September after leaving Hong Kong in June. He will take over as chief executive of FCA when it is subsequently launched in 2012.