The Association was responding to the call for evidence from the Treasury Select Committee.
The consultation is entitled ‘A New Approach to Financial Regulation: The Blueprint for Reform.”
Guy Sears, head of wholesale at IMA, says the first key issue of the paper is that it must address competitiveness as an explicit aim of the regulatory system.
He said: “Demoting competitiveness to an effect expected to merge from other objectives is a serious flaw which must be corrected.”
The provisions relating to the Financial Services Compensation Scheme also need thorough revision as questions remain regarding funding and issues such as cross-subsidy.
The bill also needs to consider that product intervention could allow ‘unfettered intervention in any business relationship’ by the Financial Conduct Authority
Finally, the IMA believes the Prudential Regulation Authority’s powers to suppress reasons for a veto over the Financial Conduct Authority should instead rest with the Government.
He said: “The Government is right to review the regulatory system. A new and proactive regulator which nips problems in the bud is to be welcomed.
“Whatever is put down on paper, the reform’s success will depend upon the quality and approach of the regulator’s senior management.”
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