Regulatory Structure | 89
The Government duly began the consultation process. However, before it was completed at the end of 2005 the Chancellor announced that the proposal to establish a new body had been abandoned. Instead, a Local Better Regulation Office would be established and the OFT would take over the other functions envisaged for the new regulator. This is not satisfactory. The OFT is culturally and politically geared to competition policy; consumer protection is very different, requiring a different mindset and different tools. At the very least the consumer protection part of the OFT’s work should be run as a separate business within the OFT with a different chief executive, board and ways of working. It is relevant that the Conservative Party is committed to dismantling the Financial Services Authority, prudential supervision of the major financial institutions being moved to the Bank of England and many of the remaining functions being moved to a Consumer Protection Agency. The Conservatives’ policy paper on banking supervision in July 2009 said – We will create a powerful new Consumer Protection Agency (CPA). The CPA will take a much tougher approach to consumer protection and will be given a mandate to act as a consumer champion. It will be a far more consumer-orientated, transparent and focused body than the FSA. We will transfer the regulation of consumer credit from the Office of Fair Trading to the CPA. This will create a unified regulatory regime for financial services firms and consumers. It is not clear that the implications of this have been fully thought through. It seems that the CPA will be a new body, taking some of the FSA’s old functions and some of the OFT’s functions, but that it will be confined to financial services matters. This would accentuate the present imbalance of resources devoted to consumer protection in respect of financial services as against consumer protection in other areas.