Clarke to be 'flexible' on PIA

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The Independent Online
KENNETH CLARKE, the Chancellor, has indicated he is prepared to compromise over some aspects of the Personal Investment Authority, the much- criticised financial regulator.

However, at a meeting with MPs and representatives from financial services on Thursday, Mr Clarke made it clear he would not back down on plans to introduce a single regulator for the personal savings industry.

The development of the PIA, due to take over from existing regulators in July, has been marred by factional infighting between different sectors of the financial services industry. The main concerns include its board and committee structure, its alleged lack of accountability, and the chairmanship of Joe Palmer, the former chief executive of Legal & General, the life insurer recently fined pounds 180,000.

At Thursday's meeting at the Commons, Garry Heath, chief executive of the National Association of Independent Financial Advisers, outlined fears that the PIA would be dominated by the banks and life insurers.

David Willetts, the Conservative MP for Havant, who attended, said the Chancellor was robust in his determination to see the PIA implemented. 'He was not in any mood to abandon the idea of a single authority for retail financial services. The message from the meeting was flexibility on detail, and commitment on principle.'

It is not clear whether Mr Clarke's flexibility would extend to making the PIA a designated agency - removing it from the control of the Securities and Investments Board and making it directly accountable to the Treasury.

Such a move might mollify PIA opponents such as Prudential Corporation, the life insurer, which favours a move to statutory regulation. Advocates of the designated agency approach suggest it would allow Mr Clarke to remove Mr Palmer, who has drawn criticism from many MPs.

Michael Colvin, the Conservative MP for Romsey and Waterside, recently suggested the Government should make the PIA a designated agency. Anthony Nelson, Economic Secretary to the Treasury, sidestepped this suggestion, which has encouraged some to believe that the Treasury is considering this option.

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