The planned Financial Conduct Authority should take on a "primary objective to promote effective competition for the benefit of the consumer", according to a report published by the Treasury Select Committee.
The report, published today, details a series of recommendations on the form and objectives that the FCA should take on, including that the original primary objective of "enhancing confidence in the UK financial system" be scrapped in favour of the more consumer-centric version.
It is hoped that the FCA "will ensure that business is conducted in such a way that advances the interests of all users and participants of the UK financial sector".
The advent of the FCA forms part of the Financial Service bill that will replace the Financial Services Authority with a number of different bodies. The Committee warned that the FCA could become the "poor relation" of the other bodies if changes were not made, but also said that the FCA is the body that will "matter most to millions of consumers.".
Andrew Tyrie MP the Chair of the Treasury Commitee said in a statement:
"We need a fresh approach to regulation.
"The plain fact is that the FSA did not succeed in protecting consumers from spectacular regulatory failures. The mis-selling of PPI and endowment mortgages are just two examples. The FSA is not only expensive, for which the consumer always pays, but many have told us that it has also become bureaucratic and dominated by a box-ticking culture."
Sarah Brooks, Director of Financial Services for Consumer Focus commented:
"We agree that the Financial Services Bill needs to have stronger provisions to protect consumers. The right balance between the demands of industry and the needs of consumers has not yet been struck. This is a once in a generation opportunity to reform our financial regulation and it is vital we get it right and learn from mistakes of the past such as the mortgage endowment and PPI scandals.
"In recent years the FSA has done a better job in protecting consumers and has been more willing to root out poor practice and products. It is important that the FCA takes further steps forward as consumers must be able to rely on an effective watchdog that is ready and willing to fight their corner."