The New Mandate for the Supervision of Financial Services Conduct

Abstract

The UK is redesigning the institutional architecture of financial services supervision. The Financial Conduct Authority is meant to play a central role in the reformed system by delivering a new policy approach to the supervision of financial services conduct, which places considerable emphasis on competition as a force for the promotion of good consumer outcomes. The article examines the Financial Conduct Authority’s statutory mandate, and focuses in particular on the interaction of the competition and consumer protection objectives. It accepts that putting a heavy responsibility on a financial regulator to create the right environment for competition in financial services to flourish has the potential to help consumers, but it is skeptical about the likelihood of success. The article examines the risk of lighter forms of regulation once again coming into favour as, over time, the current drive for more consumer protection increasingly gives way to a competition promoting, business-friendly agenda. It explains why a statutory mandate is a weak mechanism for preventing this result.