By Huw Jones
LONDON, June 13 (Reuters) - Britain's new markets watchdoglacks clarity and must be bolder about protecting consumers hitby years of misleading sales tactics, two former toppolicymakers said on Thursday.
The financial crisis prompted Britain to scrap thedecade-old Financial Services Authority and replace it with the Financial Conduct Authority in April.
It supervises some of the world's biggest foreign exchange,stock, bond, commodities and derivatives markets.
FCA non-executive chairman John Griffith-Jones said in hismaiden speech that he was developing a "radar screen" to spotproblems earlier and stamp out bad behaviour such as Liborinterest rate rigging.
But Hector Sants, who headed the FSA until last year, andPaul Myners, financial services minister during the financialcrisis, said the FCA had its work cut out.
Myners said moves toward tougher supervision began under theFSA and that Griffith-Jones had made a safe speech that left hima little disappointed.
Britain's banks have so far paid out over 10 billion poundsin compensation for misleading consumers about loan insurance,the latest in a string of sales scandals spanning two decades.
Myners said many of the directors and non-executives atlenders that sold loan insurance were still in their jobs.
"I would have liked to have got a sense the FCA had a morechallenging position. I didn't really hear that," Myners toldthe event organised by CityUK, which promotes Britain as afinancial centre.
"I fear the FCA, like all regulators, runs the risk of beingcaptured by the regulator. I did not hear a radical agenda."
Sants, part-architect of Britain's new supervisory system,said there were several areas where "greater clarity" was neededto help restore public trust in financial services.
"We need to understand a bit more clearly what the FCA'srisk tolerance actually is," Sants said.
The FCA's approach to the wholesale market and the extent towhich consumers are responsible for what they buy were alsounclear, said Sants, who heads compliance at Barclays Plc.
"To reset the agenda between firms and consumers you have tobe bold," Sants added.
Etay Katz, a financial services lawyer at Allen & Overy,said there was a "waiting game" as banks sought clarity from theFCA on how they can develop new products.
"The trick is to look at the radar and capture the righttarget and not use a scattergun approach and create a lot ofcollateral damage along the way," Katz said.
Griffith-Jones, a former head of KPMG accountants in the UK,said it was early days and the FCA board and executives weredetermined to get it right.
"I think we have got off to a respectable start. Even if youhave doubts, give us the benefit of them," he added.
Barclays (BARC)
