The banks regard Fimbra, regulator to mostly small and often troublesome firms of financial advisers, as an inadequate shower that, at least initially, was 'patently unable to perform (its) supervisory role satisfactorily'. Fimbra and other financial watchdogs 'still (have) a long way to go' in developing their supervisory expertise.
Given the strength of the banks' antipathy, it is all but impossible to believe they will be able to settle their differences with the financial advisers and the life insurers and to join them in the proposed Personal Investment Authority.
The SIB, after a brief bout of enthusiasm for the PIA, has thrown its formation into confusion. If it insists that financial advisers must have minimum capital of pounds 10,000, the SIB will have in effect scuppered the whole lengthy process - Fimbra members are not about to vote for their own demise. This suggestion is all the more bizarre given the SIB's backing for the long-running campaign, successfully concluded in November, to exempt most advisers from European Community capital adequacy regulations.
In the long term, the most likely outcome is that the SIB will take more direct regulatory control, with Fimbra and Lautro, which regulates life insurers, merging to become part of the SIB's retail division. Whether this is called statutory or self-regulation is an irrelevance.
Whatever the failings of Fimbra and Lautro, it is hard to believe that either new rules or new acronyms are going to produce the sudden improvement that Mr Large is looking for. Improvements will emerge gradually only through more effective supervision and the implementation of new training and competence regimes.
Perhaps this is recognised in the Treasury's view that, whatever the importance of investor protection, it does not justify new legislation. But there is a need to stop extensive and expensive reshaping of the regulatory framework every time the SIB gets a new boss.
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