The Securities and Investments Board came under heavy fire yesterday as two of the City's front-line watchdogs demanded a freer hand for the regulation of financial services.
Christopher Sharples, chairman of the Securities and Futures Authority, and Phillip Thorpe, chief executive of Imro, the Investment Management Regulatory Organisation, said their task was being undermined by interference from the SIB, the umbrella organisation overseeing the regulators.
"The system needs further evolution," Mr Thorpe told the Commons Treasury and Civil Service Select Committee. He said the SIB should "move back from duplicating and the unnecessary supervision of the front-line regulators".
However, after the committee hearing, one MP, who would not be named, said he was not convinced that Mr Thorpe had been as outspoken as he might have been.
The heads of the two regulatory bodies were giving oral evidence on written submissions to MPs that had been highly critical of the present supervisory system for financial services.
MPs were told that people in the UK find the set-up confusing and other European regulators, preparing for the introduction of the so-called "single passpor"- allowing securities firms to operate in any European Union member country when they have regulatory approval at home - are unsure which is the responsible authority in Britain.
Mr Sharples said: "The key thing is to try to eliminate this confusion about whose job it is to do what in the UK. My firm belief is to delineate roles more clearly to avoid the various bodies getting under each other's feet."
The SFA and Imro told MPs that they should be left to get on with the task of regulating their areas - securities houses and fund managers respectively - and that the SIB should restrict itself to a co-ordinating role.
Charles Nunneley, chairman of Imro, said it was understandable that in its early years the system required the SIB to follow closely the activities of the regulators. "But these are no longer wet behind the ears. It is far less appropriate now that the front-line regulators have learned their jobs well."
The regulators argued for a simple change at present, with the SIB taking a more back-seat role, and legislative reforms eventually to re-define the regulators' duties. Both vehemently opposed being absorbed into a monolithic body covering all the financial services.Reuse content