The Government has unveiled plans to house regulation for most financial products under one roof. The Treasury wants the yet-to-be created Financial Conduct Authority (FCA) to look after credit cards, loans, and overdrafts – all currently covered by the Office of Fair Trading.
Under the plans, the FCA would also police pay-day lending, which is currently subject to only light regulation. Critics blame this approach for the huge debts racked up by many borrowers.
The FCA was already due to take over the regulation of the consumer products currently policed by the Financial Services Authority (FSA) next year. These include mortgages, some types of insurance, savings, investments and banking (other than consumer overdrafts). The transfer to the FCA would also mean tougher regulation. It will have much greater powers than the OFT, such as the ability to levy huge fines.
The plan to police consumer financial products under the FCA's jurisdiction, forms part of proposals under the Financial Services Bill. If the bill is passed, the FCA will have these much wider powers when it takes over from the FSA next year.
Mark Hoban, Financial Secretary to the Treasury, says: "This is good news for consumers. The FCA will have much stronger powers to better protect customers who access credit, including from pay-day lenders. It will be a more proactive regulator, empowered to tackle problems before consumers are harmed and able to respond much more quickly to market developments."