Friday, 2 May 2014

Financial Regulators for Treasury Review

UK Chancellor George Osborne has announced this week that the Treasury will conduct a review of the enforcement processes adopted by financial watchdogs, to ensure they are in line with national regulations. What could this review mean for you if you are looking to sell your business right now?

Financial watchdogs such as the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are the final arbiters for disputes over financial products and services in this country. Should your business enter a dispute of this kind, they will resolve it.

George Osborne Speaks
The Chancellor of the Exchequer, the government minster ultimately responsible for financial matters in this country, and the executive in charge of the Treasury, has said that he is planning to examine whether both the PRA and FCA were striking the “appropriate balance of fairness, transparency, speed and efficiency”  in carrying out their remit.

This decision to further examine the activities of financial watchdogs comes at a difficult time for the FCA in particular, as it has come under fire as of late for the way it is carrying out its mission to police the financial market.

Specifically, the Chancellor openly suggested that the watchdog had committed an “egregious” error in the manner in which it briefed local and national media on its yearly business plan last month. It’s important to note that this incident did not result in any action being taken.

The FCA under the Spotlight
The FCA in particular has been far more effective than its predecessor, the Financial Services Authority (FSA). Not only has the FCA taken a stronger line against individuals, it managed to raise the total value of fines from £35 million in 2009 to £472 million in 2013.

However there has been a trade off, and that has been a lengthening of the period of time FCA investigations take and an increase in the number of incidents being referred to the Association’s enforcement division. Experts suggest that these are key areas the Treasury will investigate.

The Financial Times spoke to Nathan Willmott, a partner at law firm Berwin Leighton Paisner, on the issue. Willmott said: “The main concern from all sides is the time it takes from launching an investigation to making a decision on whether there is a case to be answered, and then going through the FCA’s internal decision-making process.”

At RTA Business Consultants we realise that the significant role the FCA in particular plays in the financial sector means that any finding by the treasury could have a significant impact on the business community. If you are looking to sell your business right now, it is certainly an issue worth keeping track of.

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