Wires

UK watchdog snubs call to water down financial reform

By Huw Jones

LONDON, Oct 10 (Reuters) - Britain's financial watchdog saidit was pressing ahead with a reform of how consumers are soldinvestment products from January, dashing industry hopes forlast minute changes.

The Financial Services Authority (FSA) has faced a barrageof criticisms that its planned overhaul, known as the RetailDistribution Review (RDR), will put unfair burdens and curbs onadvisory firms.

The reform will end commission-based selling in a bid todraw a line under two decades of mis-selling scandals.

"It has been five years in the making, RDR, and I can'tpromise it's perfect in every respect. We have said we will do atwo-year review," FSA managing director Martin Wheatley said.

"Given how close we are to this, I don't think we are goingto be making further changes from here," he told a conferencefor private client investment managers.

He will head Britain's new Financial Conduct Authority (FCA)after the FSA is scrapped in early in 2013.

The FCA will continue with a "credible deterrence" policy ofcracking down harder on market abuses, he said, giving a tasteof the new policy paper he will release next Tuesday detailinghow the new watchdog will operate on the ground.

In a move that has alarmed banks and investment funds, theFCA will have powers to ban products.

In the past any concerns over a product triggered lengthyconsultations before action was taken, often too late.

Lawyers have already accused Wheatley of ushering in a"shoot first, ask questions later" strategy, but he stressedthere will be no going back.

"We will make the intervention first and then we will carryout the consultation and the cost/benefit analysis," Wheatleysaid.

The FCA will publish fewer consultations in general andinstead focus on a narrower set of cross-industry issues.

"We will be much more straight in terms of directing you interms of what we think works and does not work," Wheatley said.

He is already worried that consumers, faced with paltryinterest rates on their savings, are turning to unsuited,complex products in search of higher returns.

"It is essential you start to make sure you are deliveringand demonstrating suitability," he told the audience of brokersand investment advisors.

(Reporting by Huw Jones; Editing by Mark Potter)

((huw.jones@thomsonreuters.com)(+44 207 542 3326)(ReutersMessaging: huw.jones.thomsonreuters.com@reuters.net))

Keywords: BRITAIN FSA/WHEATLEY