The Treasury is squandering the opportunity to arm London with an effective financial services regulator by a "piecemeal" approach to consultation, leading financial services lawyers have warned.
Lawyers were hoping the draft bill, published by the Treasury a fortnight ago, would end uncertainty over who and what activities would come under the Financial Services Authority's supervision, and how many teeth the regulator would be given.
But, instead the 233-clause bill - which is supposed to form the basis for consultation - has left many of the fundamentals to secondary legislation.
Lynn Johansen, a finance partner at Clifford Chance, complained that the Treasury has allowed only three months for consultation.
Industry and consumers would therefore not be able to comment sensibly, she warned, and "a valuable opportunity could be lostS So much of the real meat remains to be seen".
Simon Morris, a financial services partner at Cameron McKenna, asked: "Is it going to make a difference to 99 per cent of the business covered by it? The answer is that we don't know yet."
Morris warned that real upheaval would be caused by the rules and regulations made under the new legislation, particularly the rules of conduct of investment business.
Clifford Chance has issued a client briefing in which it warns that the bill introduces the concept of "regulated activity" but leaves defining it to secondary legislation.
It concludes: "A great opportunity to arm London with an effective and flexible financial regulatory system will be squandered if a piecemeal approach to consultation prevents coherent analysis of the proposed regime and legislation."