Liz Truss, favourite to become the next Prime Minister of the United Kingdom, is eyeing up plans to merge the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA) and the Payment Systems Regulator (PSR) into a single body, according to reports this morning in the FT.
Tom Selby, head of retirement policy at AJ Bell, said: “When applied effectively, regulation can provide vital protection for savers and investors.
“The FCA, PRA and PSR all play slightly different roles in the UK regulatory system, so it will be important any merger maintains the key protections each individual regulator is currently responsible for.
“The former city regulator, the Financial Services Authority (FSA), was carved up in the aftermath of the financial crisis. Reversing that move to bring regulatory powers under one roof again would be a major undertaking.
“There is arguably a stronger case for folding at least some of the responsibilities of The Pensions Regulator (TPR) into the FCA. From an end saver’s perspective, there is often very little difference between a trust-based pension, which is regulated by TPR, and a contract-based pension, regulated by the FCA.
“While TPR and the FCA often work together, they continue to set rules independently. Having two regulators for what is essentially the same product carries the constant risk of inefficiency, with rules either duplicated or applied in different ways.
“This can also lead to wasted resources and confusion, particularly for businesses which operate in both the trust and contract-based pensions worlds. At the very least, a review of whether TPR’s regulation of trust-based defined contribution (DC) schemes could be carried out more effectively by the FCA would seem to have some merit.”
