Financial institutions 'must protect consumers' following regulatory changes
29 January 2004 | 3294 views | 0
Online brokers will be required to place a stronger emphasis on protecting consumers in the light of expected regulatory tightening by the Financial Services Authority (FSA) and the European Union (EU).
That's the message delivered by Treasury Select Committee Member John Mann MP as he addressed delegates at the Finexpo 2004 event.
Speaking at a seminar hosted by leading Financial IT software provider Peter Evans, the MP said the EU Financial Services Action plan would have a significant and lasting impact on brokerages through the advent of a single set of international accounting standards.
"The move away from varying national standards is something the EU is keen to push through - we can expect the implementation of a number of new rules in 2004," he said.
"The Action Plan - a cornerstone of which is likely to be the 'Markets in Financial Instruments' Directive - has the potential to impose changes on the way we do business in the UK, at the most basic level. The loss of 'national standards' decided by policy makers in the UK will impact the way trades are executed.
"Doubtless, those companies with pan-European operations may benefit in some ways from a single set of standards - although it may create problems if the regulations are more complex and onerous than those currently in operation. That remains to be seen - but we should all be geared up to respond to change," he said.
Mr Mann also told delegates that the Treasury Select Committee had a role to play in working with Financial Institutions to ensure fairness and probity following the advent of the new international accounting standards.
The Peter Evans seminar, titled 'Internet Broking: Issues and Future Challenges' attracted delegates from major financial institutions, established internet brokers and smaller City firms looking to break into the competitive market of online share dealing for private investors. Also speaking at the seminar was John Walker, from Peter Evans Client comdirect, and Peter Evans Managing Director Dr Mike Foley.
Mr Mann addressed key points from the FSA's 2004 Risk Report, which places a strong emphasis on the importance of giving customers and investors the tools to effectively manage their own financial affairs, and plan for retirement.
"The 2004 Risk Report, published last week, makes the case that financial decisions are being taken by individuals with inadequate information - this lack of understanding of financial terms and issues is of considerable concern.
"My appeal to the industry is to help us by encouraging, wherever possible, clear explanations of the risks involved in private investing."
John Walker examined the challenges and potential pitfalls for established private investor brokers wishing to enter the arena of retail stockbroking.
"For many organisations, technology has not kept pace with business requirements. In the short term, there is real financial and operational risk from a market surge," he said. "Private Investors will benefit longer term however from access to an ever increasing range of cost effective investment products - the underpinning technology though will increasingly consolidate around organisations and suppliers that have and continue to invest."
Mike Foley said: "The Finexpo City Technology event allowed delegates to discuss these issues and work together to craft ideas on how technology can play an increasing role in achieving that satisfaction. John Mann's attendance certainly underpins the importance of Finexpo and I'm sure his speech got delegates thinking about the regulatory hurdles ahead."
Peter Evans is a leading specialist software provider working with some of the biggest names in the securities and investment industry to provide innovative straight through processing and back office solutions. Website: www.peterevans.com
The Company also provided delegates the chance to view the interfaces of its flagship complete back office system, TRACS, and its leading CREST settlement solution Axim at a specially constructed display stand in the Finexpo main hall.