Regulator and MPs in fresh war of words

A WAR of words has erupted between MPs and the Financial Services Authority over the regulator's abrupt response to a proposed delay in changes to investment selling rules.

In a letter to FSA chief executive Hector Sants, the Treasury select committee (TSC) chairman Andrew Tyrie has criticised the speed with which the City watchdog appeared to reject its proposals.

The exchange followed last weekend's TSC report on the retail distribution review (RDR), under which commission paid to IFAs will be banned and advisers must reach higher qualifications. It called for a one-year delay in the implementation of the new rules, set to come into force on 1 January 2013.

However, the FSA responded while the report was still embargoed by reaffirming its commitment to the current schedule. Tyrie said: "We deprecate the authority's action. It was precipitate, giving the impression that no adequate consideration had been given to the arguments for the delay we recommend. This is unacceptable."

But Sants has hit back, claiming the FSA is "considering carefully the recommendations in the report" as it prepares its full response, due in September.

In a response sent to Tyrie yesterday, Sants said: "It was certainly not the intention of the FSA's brief statement of 14 July to be seen as a peremptory rejection of any element of the committee's report. Rather, it was intended simply to ensure that the momentum behind the preparations for the RDR is not lost."

But Iain Wishart, of Wishart Wealth Management in Edinburgh, predicted that the FSA would dismiss the TSC's findings. "The FSA will shred anything any TSC comes up with as it doesn't want any perceived flaws in RDR to surface at this late stage," he said.