KPMG warns Tories over plans for FSA

BIG FOUR accountancy firm KPMG yesterday hit out at Tory shadow chancellor George Osborne&rsquo;s plans to reform financial regulation, suggesting his pledge to scrap the Financial Services Authority (FSA) could be disastrous.<br /><br />KPMG&rsquo;s head of regulatory services Marcus Sephton said the change could lead to the City treading water for 15 months as the transition takes place, with bad practices slipping through the net.<br /><br />He said the FSA took over a year to establish itself, resulting in a period of uncertainty that is likely to be repeated under Osborne&rsquo;s plans.<br /><br />But Osborne&rsquo;s proposals are supported by KPMG rival PricewaterhouseCoopers (PwC).<br /><br />John Tattersall, PwC&rsquo;s chairman of financial services regulatory practice, said Osborne is consulting far and wide and should be able to revamp the regulatory system without sparking chaos in the City.<br /><br />&ldquo;I have seen a lot of changes of government and changes of regulator. But the same people tend to end up doing it, often at the same addresses,&rdquo; he said.<br /><br />&ldquo;I wouldn&rsquo;t be surprised if they end up at the same email addresses,&rdquo; he added.<br /><br />Tattersall said that while Osborne&rsquo;s announcement sounds dramatic, in reality the &ldquo;attitude&rdquo; of regulation will remain the same.<br /><br />Although some individuals will remain in their roles, handing oversight to the Bank of England could lead to positive changes, he said.<br /><br />&ldquo;There is a strong view that the regulatory structure has failed,&rdquo; Tattershall added.<br /><br />Accountancy firms stand to gain from an overhaul of financial regulation, as they are called in to advise firms on how to ensure they comply with the new rules.