FCA given power to instantly ban products

The new Financial Conduct Authority (FCA) will have the power to instantly ban unsuitable financial products without consultation. In a guidance document published yesterday, it was also revealed that the new authority, which will be replacing the Financial Services Authority (FSA) early next year, will be able to impose tougher penalties for financial misconduct, pursue criminal prosecutions and make supervisory judgements about a firm's business model and forward-looking strategy. "The FCA offers a huge opportunity for the regulator and firms to start afresh, and work in partnership to reset how we deal with conduct in financial services," said FSA managing director, Martin Wheatley. The guidance was welcomed by the Council of Mortgage Lenders, the Building Societies Association, the Investment Management Association and the Association of British Insurers. Consumer Focus warned, however, that "the test of the FCA will be whether it prevents toxic products such as PPI, mortgage endowments or split capital trusts in the future. Will it intervene early or will pressure from industry delay action? A model where customers are ripped off, and then awarded compensation years afterwards, is expensive and wasteful and serves consumers badly."

Dramatic rise in mutual lending

Gross mortgage lending by building societies amounted to £3 billion during August, latest statistics from the Building Societies Association (BSA) have revealed. Total lending from mutuals rose by 40% compared with August 2011, whilst savings balances held with building societies increased by £1,158 million, suggesting a growing number of savers prefer to place their finances with mutuals rather than banks. Building societies took a 23% market share in August, 16% higher than in August 2011. Adrian Coles, director-general of the BSA, said: "Lending by mutuals grew substantially in August compared to the same month last year which continues the trend of increased levels of lending activity by mutuals over the year so far. Lending by banks however fell by 13% in August, which follows a 9% reduction in July. Savings balances at mutuals were up significantly compared to August last year. With consumer price inflation on a downwards trend, the pressure on household finances eased somewhat allowing more money to be saved. The changes in deposits may also reflect consumers switching their accounts over to mutuals over the past two months as people opt for better service and a more ethical way of banking."

Hooray, people are finally realising that mutuals are a good idea.

Call for payday loan regulation

The chair of the Consumer Credit Counselling Service, Lord Wilf Stevenson has called for the payday loan sector to be regulated. The Labour peer claimed that amendments would be made to the Financial Services Bill, by the Government, in order for the sector to be regulated over the next year, should it fail to self-regulate. Lord Stevenson said: "The amendment calls on the financial authorities to come up with a scheme for regulating high-cost loans, or payday loans, within a year. The truth is that the people who earn least in our society have the most need to have access to short-term borrowing such as payday lenders so they can just get through the year."

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Hard to believe payday loans are not already regulated.