The creation of a new regulatory body, the Consumer Protection and Marketing Authority, to replace the Financial Services Authority in overseeing motor retailers is likely to lead to a ‘zero tolerance’ approach to ensuring consumer protection.
The Consumer Protection and Markets Authority will take on the FSA’s responsibility for consumer protection and the conduct of all retail and wholesale businesses. It is the CPMA that is likely to oversee activities undertaken by motor retailers. It is understood it will have a tougher, more proactive approach than the FSA.
Two other bodies are to be created. The Financial Policy Committee will have responsibility for considering the wider economic issues and the dangers to stability, directing the new Prudential Regulation Authority to take regulatory action against deposit-taking High Street banks, insurers and investment banks.
Both the FPC and PRA will be chaired by Bank of England governor Mervyn King.
Stephanie Murdoch, managing director of Alliance Consultancy, said: “There has never been a greater need for keeping up-to-date on regulatory requirements.
“It is clear from the announcements made that we are now moving into an era of zero tolerance to non-compliance and senior management’s culpability for the decisions they make in the success or failure of their business.”
The new regulatory bodies are to be in place by the end of 2012 before which there will have been a consultation process.
The Government is expected to publish the consultation document before Parliament’s summer recess. In the meantime the FSA will continue to function with the expectation businesses will “maintain high quality, focussed regulation during the transition”.
“What will happen during the transition or after the 2012 deadline is not clear,” Murdoch said. “It is likely there will be amendments to current rules, processes and procedures and almost definitely a period of ‘shifting sands’ and uncertainty during which motor retailers will need to remain diligent, particularly at a time when the new EU Consumer Credit Directive needs implementing.”
Sue Robinson, Retail Motor Industry Federation director, said: “These changes will give us a renewed opportunity to lobby on behalf of members to have the insurance regulatory framework reviewed.”
> The consultation document on changes to the regulatory framework can be read here.