The outgoing head of Britain's Financial Services Authority and a panel overseeing its work called on the watchdog yesterday to consider taking on retail banking regulation in an effort to revive consumer confidence.
John Tiner, who stepped down as chief executive yesterday after four years at the helm, told an annual meeting that retail banking oversight should be consolidated, adding the reasons that led to a separate code of conduct were no longer valid. Currently, retail banks operate under the Banking Code, a self-regulated code of best conduct.
"Consumers on the high street expect to be protected by the FSA," he said, reiterating a call made earlier this month for retail banking oversight to be reviewed. "I would put the (Banking) Code inside the FSA."
John Howard, the chair of the Consumer Panel that advises and monitors the FSA's work from a consumer perspective, also said the regulator should consider bringing the retail banking sector under its wing.
"Change is necessary in this sector. Public confidence is at a low point," Chair John Howard told the meeting, adding this could mean the FSA should take on the entire sector.
"I tend to think the FSA is too soft and should take more of a stance in regulating retail banks... Maybe they need to step into the arena," he said in answer to a question. Issues including how much customers pay for services like overdrafts have prompted a consumer backlash against banks and bank charges this year, with thousands of consumers downloading pro-forma letters in order to reclaim penalty charges.
Mr Tiner said in a valedictory speech earlier this month - which the FSA emphasised reflected his personal views - that retail banking regulation should be brought under the FSA umbrella to eliminate a "regulatory gap" and give the watchdog a better overall view of UK banking.
The FSA, however, has been wary of over-stretching its already wide brief.
"I view this advice with great interest," FSA Chairman Callum McCarthy said.
Earlier this year, in recommendations ahead of a review of the personal and business banking codes that govern UK financial institutions, the FSA said the Banking Code should include an over-arching fairness objective. It said yesterday that this remained its official view.