Britain’s financial watchdog was yesterday accused of acting as a lobbying arm for the sector it is supposed to be regulating.
Anti-poverty campaign group the World Development Movement claimed that funding from the City of London and a board dominated by figures from the banking sector had led to a close relationship between regulators and the financial sector.
It said the Financial Services Authority had suffered “corporate capture” and is now so aligned with the financial sector’s interests that it is using its resources to lobby in the European Parliament in an attempt to dilute proposals to regulate the commodity markets.
The FSA is due to split into two bodies next year, with one dealing with prudential matters and one focusing on conduct.
World Development Movement director Deborah Doane said: “We’ve already seen the impacts of the chaos and damage caused by the FSA’s cosy relationship with the City and its consequent failure to properly regulate the sector in the run-up to the financial crisis.
“We need the FSA to halt its lobbying activity now, and when the new bodies are set up, for stronger governance structures to be put in place to avoid corporate capture.”
A spokesman for the FSA said the group is required by current legislation to take account of the competitive position of the UK financial services industry.
He said: “The FSA attempts to influence the international and European policy agenda for the benefit of the UK economy and we do this by playing a prominent role in a number of EU wide bodies, and supporting the government in its EU negotiations.”
He added that the FSA seeks the industry’s views on issues that affect it and the UK economy, but has similar contact with other interested parties, including consumers.
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