Dear Listener

The Treasury set out the details this week of the three bodies that will replace the Financial Services Authority. Here are its initial thoughts. The FCA is the new name for the CPMA formed from the breakup of the FSA into the PRA, FPC and FCA (formally the CPMA), according to a document from HMT. As Thomas Selby tweeted to my twitter account @paullewismoney it ‘could be an acronym-onious split’. You may groan but I laughed.

The serious point is that after years of banging on to top FSA bods and politicians that the FSA should regulate products and should name the firms it is investigating, the new Financial Conduct Authority (FCA) will be able to do both! Which is good news.

At the moment the only way the FSA can regulate products is to constrain the process so tightly in terms of treating customers fairly they some products can, in effect, not be sold at all. But that is clumsy and time-consuming. In future the new FCA will be able to act more quickly and clearly about products it thinks are dangerous.

It will also end the daft situation where the FSA does mystery shopping, finds firms about which it has serious doubts but has to keep their names secret until it has gone through formal enforcement action and given the firm the chance to appeal. It is as if a burglar was left free to roam our back gardens until he had been convicted and exhausted the appeal process. Not that I am likening taking money off people through mis-selling financial products with burglary. The former is far more profitable and is, of course, normally legal. 

I am slightly less pleased that the word ‘consumer’ is no longer in the FCA’s title and that consumers are kept as the third out of four tasks of the FCA (the same place consumers now occupy in the list of the FSA’s objectives). Ahead of consumers are enhancing confidence in the UK financial system and facilitating efficiency and choice in services. Then comes “securing an appropriate degree of consumer protection” exactly the same phrase that is used for the FSA now. Why not just protecting consumers? What is an appropriate degree? Especially when the fourth task is simply ‘protecting and enhancing the integrity of the UK financial system’.

Read the whole paper here http://www.hm-treasury.gov.uk/d/consult_newfinancial_regulation170211.pdf and you can let HMT, sorry Her Majesty’s Treasury, know what you think by 14 April.

NB: FSA is the Financial Services Authority; FPC will be the Financial Policy Committee; PRA will be the Prudential Regulation Authority; FCA will be the Financial Conduct Authority; CPMA (now FCA) was to be the Consumer Protection and Markets Authority.

***IN MONEY BOX THIS WEEK***

Why has the cost of insuring your car gone up by a third in one year – the biggest rise since records began? The industry blames fraud and the accidents of uninsured drivers (which we all pay for). But we discover a different reason.

Women live longer than men so they get less per year when they convert their pension pot into an annuity. But they pay less for fixed term life insurance as the chance of them claiming is lower. They also get cheaper car insurance as they have fewer accidents. But on 1 March the European Court of Justice will decide if that sex discrimination is lawful or not. If it is not, then men will get lower pensions and women pay more for insurance.

Mothers – single or in a couple – will be forced to go back to work once the youngest child reaches 5 under plans unveiled in the Welfare Reform Bill. And how will the guarantee that no-one will be worse off in cash terms at the point of change actually work?

And redundancy payments over £30,000 will be taxed differently from April. For ‘differently’ read ‘more heavily’. If too much tax is taken, you can claim it back. At the moment these payments are usually taxed too lightly and then HMRC has to get it back. So the new rules err on the side of HMRC rather than us.

Phew. We have the cider presses out to squeeze that ripe fruit into our 24 minute flagon which you can imbibe live on Saturday at 1204, repeated Sunday at 9pm and you can listen any time via the podcast page www.bbc.co.uk/podcasts/series/moneybox. Check out our website www.bbc.co.uk/moneybox to follow links, download transcripts, send us stories or ideas you want us to look into and Have Your Say on car insurance premiums and why they are up by a third.

This newsletter is available at bbc.co.uk/moneybox/newsletter shortly after it hits your inbox (tell your friends who don’t subscribe) and you can keep up with my random but timely thoughts on money 24 hours a day at www.twitter.com/paullewismoney.

Best wishes,

Paul

PS don’t forget the programme trail on Breakfast on BBC 1 between 0845 and 0900 on Saturday. And I am back on Breakfast on Thursday at 0640ish and then answering emails from viewers at 0810ish.

e-mail Paul Lewis