FSA may have home-loan role

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The Independent Online
THE FINANCIAL Services Authorities, the new City super-watchdog, may be allowed to regulate mortgages, retail banking products and general insurance, Helen Liddell, economic secretary to the Treasury, said yesterday.

Ms Liddell said the Treasury would have the power to extend the supervisory responsibilities of the FSA if it found the existing regime offered customers inadequate protection.

The economic secretary highlighted mortgages - "probably the most significant transaction most ordinary people undertake in their lifetime" - retail banking products and general insurance as areas where the FSA could step in. At present, none of these areas is subject to statutory regulation.

Ms Liddell said: "As we are now in the process of setting up a regulatory framework which will see us well into the next century, we want to ensure that we have relevant powers available to us if action is required."

The announcements were given a warm reception by the financial services industry.

The Council of Mortgage Lenders (CML) said it was pleased the economic secretary had decided to give its new voluntary code of conduct for the industry - introduced last summer - "a fair trial".

Ms Liddell said the code would be subject to regular reviews, and that the FSA could step in if the code did not measure up, but that the first formal review would not be until 1999.

Michael Coogan, the CML's director general said: "We are pleased the Government recognises the fact that the mortgage industry is taking the code seriously and is working to make it succeed".

The Government also issued a consultation paper on the future of the Insurance Brokers' Registration Council (IBRC) yesterday. The government is proposing to abolish the IBRC and allow the FSA to regulate all insurance intermediaries who arrange life insurance, whether or not they describe themselves as insurance brokers.

Mike Williams, chief executive of the British Insurance and Investment Brokers' Association (BIIBA), said "the existing regime hasn't offered anything more than a confusion".

At present, an individual can only use the title of "insurance broker" if he or she is granted IBRC registration. However, many unregistered insurance intermediaries conduct similar business to investment brokers simply by using titles such as "consultant".