On 25 March 2013, the UK’s Financial Services Authority (FSA) published a Policy Statement which confirms that the Financial Conduct Authority (FCA) will use its Temporary Product Intervention Rules (TPIRs) power in the way the FSA proposed (see our earlier blog). The FCA will be established, and its TPIR power will become available, on 1 April 2013.
The Policy Statement includes a description of the process the FCA will use for making a TPIR. The FCA will usually be required to consult the Prudential Regulation Authority and the public before making new rules (see section 138I of the Financial Services and Markets Act 2000 (FSMA)). However, TPIRs can be made without public consultation if the FCA considers that that is “necessary or expedient…for the purpose of advancing [its] consumer protection objective or the competition objective or [its] integrity objective [if a relevant integrity objective order is in force]” (see section 138M of FSMA).
If the FCA is considering whether to make TPIRs, it will prepare a paper for discussion by a committee, which will have the power to propose the TPIRs to the FCA’s Board for making. If the FCA’s Board makes the TPIRs, the FCA will publish them on its website together with a statement which explains the rationale for the rules.
Martin Wheatley, Chief Executive of the FCA, has said “The creation of the FCA is our opportunity to reset conduct standards. This power, along with our other new powers, helps define how we will regulate going forward. We know that some in the industry are concerned about us using this power too hastily…we know proportionate judgment is needed, and that is what we will exercise. I do not expect us to use this power frequently, but … we will not hesitate to use these powers where we have serious concerns”.