A government committee said it will scrutinise the Financial Conduct Authority’s proposals for advice firms to set aside extra money to deal with compensation claims.
The Treasury sub-committee on financial services regulation plans to examine the new proposals in the first half of 2024.
Committee chair, Harriett Baldwin, said: “Regulation of the financial services industry must strike a very delicate balance between ensuring robust protections for consumers while not being overbearing and stifling competition.
“The sub-committee is very cognisant of that, which is why it’s so important that we scrutinise the regulators’ consultations.”
In November 2023, the FCA said personal investment firms could have to hold more capital to deal with compensation claims which would get around the issue of some which cannot access personal indemnity insurance.
Latest figures showed the Financial Services Compensation Scheme paid out £757mn of the £973mn that consumers received in redress between 2016 and 2022.
Also on the agenda for the committee to scrutinise in 2024 is a FCA consultation on access to cash in an increasingly digitised financial landscape.
It also expected to scrutinise the work of the Prudential Regulation Authority, with a focus on the resilience of the UK financial sector in relation to the use of third-party providers.
In 2023, the committee carried out scrutiny of proposals for the reimbursement to victims of authorised push payment from the Payment Systems Regulator.
It confirmed the maximum payout per claim would be £415,000, with a final date for firms to comply set at October 7, 2024.
Baldwin added: “We’ve seen the positive impact of the sub-committee in the last six months, including in relation to APP fraud reimbursement and insurance.
“It’s important we continue this work with full vigour in 2024.”
tara.o'connor@ft.com
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