Five Questions About: The new consumer protection authority

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The Independent Online

What is the Consumer Protection and Markets Authority?

After the worst financial crisis in decades, the way the UK's stock markets are regulated is to change. The Treasury is running a three-month consultation on how the regulatory systems should be reformed and one proposal is the creation of a new Consumer Protection and Markets Authority (CPMA) as a way of promoting greater confidence in financial services.

What would it do?

This organisation would have two main roles: protecting consumers and promoting confidence in the integrity and efficiency of the UK markets. Its markets division will regulate conduct within the wholesale markets and also represent the country at the new European Securities and Markets Authority.

How will it help consumers?

In terms of protecting customers, it would regulate and supervise companies providing financial services. The Government says the CPMA body would be a strong consumer champion, with a dedicated focus on proper conduct. On top of that, it would oversee the Financial Ombudsman Service, the Financial Services Compensation Scheme and the Consumer Financial Education Body.

What will happen to the FSA?

The Financial Services Authority (FSA), the independent body that regulates the financial services industry in the UK, will be abolished and the CPMA would be one of the new bodies created to take responsibility for its current duties.

Why has the CPMA been proposed?

The Government claims that consumers buying retail products have not been receiving the protection they need or expect under the current system. It says it is impractical for the FSA to deal with issues as wide-ranging as the soundness of global investment banks and the treatment of customers at a high street level. It intends that the CPMA will be able to focus more effectively on its two roles – customer protection and market regulation – which will mean greater stability in the financial markets.

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