FCA - hitting the road By entitling its latest tome "Journey to the FCA," the UK's newly created Financial Conduct Authority is at least trying to inject some drama into financial regulation. The document lays out how the FCA, which will soon be responsible for the relationship between the financial services industry and its customers, plans to reach a point where both parties are happy. A lot of it is common sense - getting the industry to sell the right products to the right people, looking ahead so that problems can be stopped early, and banning products that are not working well. But the exact route of the FCA's journey is still unclear and, despite its insistence that companies doing the right thing have nothing to fear, both the industry and investors who have backed it should be wary. First, while the FCA's paper gives a nod to innovation and new ideas, they are not its core purpose. If the FCA makes overactive use of its power to ban products, the industry will lose its incentive to innovate. Just look at the impact of growing regulation on the pharmaceutical industry. Second, the government is trying to rope the FCA in to its drive for more competition in financial services. That suggests a wider remit - market structure is not the same as market conduct and the FCA could struggle to combine the two. Finally, it is not clear whether the FCA will look at consumer conduct. The wave of claims for mis-sold payment protection insurance (half of which, according to some banks, are fraudulent) demonstrates a growing enthusiasm for launching legal complaints at the drop of a hat, raising costs for both investors and other customers. The danger is that, encouraged by their PPI success, claims management companies swiftly move on to another target. This type of financial services conduct should also be covered by the FCA's journey.