Reforming Financial Markets: HMT Consultation

RFM is a response on behalf of the government to the Turner Report, though it does have some cross-over with several major RDR issues. Matters have changed somewhat since the initial publication of the text and macro-economic aspects have largely been taken over by G20/Financial Stability Board rulings and the announcement by the EC of the new ESRB / EBA/ ESMA & EIOPA.

Rt. Hon Alistair Darling,

HM Treasury,

1 Horse Guards Road,

London,

SW1A 2HQ

Dear Sir,

REFORMING  FINANCIAL MARKETS

In addition to above consultation paper the global banking crisis of 2008 has necessitated a number of in-depth studies including those of Lord Turner and Jacques de Larosiere.

Essentially, focus has now passed to taking the macro and micro-economic measures to avoid, or at least to mitigate, any similar occurrence in the future without recourse to the tax payer. The recent G20 conference in Pittsburgh and the rulings of the Financial Stability Board together with EC plans to establish a European Systemic Risk Board (ESRB) will undoubtedly have a fundamental influence on the future of UK banking as activities and strategies are scrutinized and capital bases are significantly strengthened.

However, HM Treasury raises a number of key issues in Reforming Financial Markets which remain unanswered. In particular, annex B includes a section entitled ‘Competitive markets that work for consumers’ and discusses the difficulties of providing financial services in a viable regime for product provider, distributor and consumer across all income groups.

On this occasion, rather than respond across all the topics highlighted in the CP text, we believe that greater value can be provided by focusing exclusively on an area of our expertise.

This is section 2b regarding ‘access to simple, transparent products’. Many commentators feel that the FSA’s current RDR proposals will create a regime where investment advice will only be available to the HNW and the needs of lower income groups are being overlooked. We will explore this issue in appendix A whilst our formal response to the specific questions 12 to 17 as raised in the CP are to be found in appendix B.

Please do not hesitate to contact me should clarification be required on any point.

ROGER DAVIES  BA ACIB APMP

Principal Consultant

UK and European Regulation

ea Consulting Group

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