Cole: FCA will be more interventionist than FSA

Margaret Cole of the FSA tells participants at a CSFI event that a change in culture from the FSA to the FCA will allow for a more proactive regulator

The UK's planned Financial Conduct Authority (FCA) will be "a much more interventionist and proactive regulator" than the Financial Services Authority (FSA), according to a senior FSA regulator. Margaret Cole, interim managing director of the FSA's conduct business unit, which will form the core of the new FCA, said a change in culture within the regulatory bodies would allow for a much wider use of regulatory powers after the transition, due to take place over the next two years.

"There will be more risk for the regulator and less risk for the consumer," said Cole, speaking at the Centre for the Study of Financial Innovation in London. "The FCA will have to take a more intrusive stance than the FSA – it's all about a different approach to heading off detriment," she said.

The regulator has been accused in the past of not reacting quickly enough to intervene when necessary. One participant at the event described the attitude of the regulator as "anything that is not prohibited by a specific rule is OK".

Charlotte Hill, head of regulatory compliance at international law firm Stephenson Harwood, agrees. "I think people feel that if there had been more regulation earlier, things such as Northern Rock and even the financial crisis perhaps could have been averted," she says.

Cole said the new FCA will work with its powers to tackle issues that might not have prompted the same level of intervention in the past. "There will be a willingness of regulators to use their powers," Cole said of the FCA at the event.

One participant at the event agreed this would be the case. "The relationship between the regulators and the industry is going to become more adversarial," they said. Cole added: "There will be a greater balance between enforcement and supervisory powers in the FCA."

But not everyone is convinced. "The FSA is very much saying ‘we're going forward into a brand new world and things are going to be different'," says Hill. "It's an opportunity to start again in some ways, but when you consider that it's all the same people from the FSA who are going to be manning the FCA, and that they're already starting to work in those particular siloes, I wonder how much change there will really be."

Hill also doubted how easy it would be to replace the FSA culture within the new agency. "I think it's going to be tough," says Hill. "When the FSA was created it was much more of a brand new organisation with a brand new rule book and a new approach generally. The FCA is going to have difficulty because it isn't really a brand new organisation – it's more just a splitting up of what we have already."