Watchdog must bite harder: MPs

THE Financial Services Authority told MPs that probes into 13 or 14 cases of possible market abuse were at an advanced stage, but it was accused of failing to use its teeth.

New FSA chairman Callum McCarthy told the Treasury Select Committee that it hoped to go public with its findings on market abuse shortly. The watchdog wants to talk to government about speeding up its investigations process.

FSA chief executive John Tiner revealed that it had widened its probe into possible collusion among firms involved in the split capital investment trust scandal and is now looking at 21 separate companies.

The watchdog faced criticism last year for not acting swiftly enough to prevent thousands of investors losing money in splits - often marketed as low-risk investments.

Following the £1.9m fine on Lloyds TSB for mis-selling risky 'precipice bonds', Tiner said the FSA is looking at 'a small number' of other mis-selling cases.

McCarthy rebuffed claims that FSA fines were too low, claiming that the damage to reputation suffered by companies such as Lloyds TSB was at least as powerful.

He also resisted calls for the FSA to follow the lead of high-profile campaigners, such as New York attorney general Eliot Spitzer, by introducing stringent new rules on preventing conflicts of interest among analysts.

McCarthy said: 'We don't regard ourselves as being in competition with Spitzer or anyone else.'