A shadow minister has pulled back from an attempt to amend legislation to ensure Financial Services Compensation Scheme (FSCS) costs are minimised.
Had it been pursued and approved, the amendment to the Financial Services Bill, tabled by shadow financial secretary Chris Leslie, would have required the Prudential Regulation Authority (PRA), a successor to the FSA, to "minimise, as far as possible, the costs to the FSCS or the use of public funds to support or rescue parts of the UK financial services industry".
Addressing the Financial Services Bill committee today, Leslie argued it was "not unreasonable to have minimal recourse to FSCS funds as far as possible" and pointed out that they were not "drawn from thin air" but from levies on practitioners within the industry.
Concentrating on the public funds element of the amendment, financial secretary Mark Hoban explained how it could "blur the lines" of responsibility between the regulator and the government.
Following a request from Hoban, Leslie withdrew the amendment, although he pointed out Hoban had failed to address the FSCS aspect of it.
He also indicated he may return to the issue at a later point during the committee's deliberations.
Under the proposed legislation, the PRA will take over responsibility for the day-to-day supervision of banks, insurers and brokers for safety and soundness from early 2013.
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