The Treasury Committee has recommended that the Financial Conduct Authority should have a duty to promote competition for the benefit of consumers.

This would be an initiative similar to that of the Independent Commission on Banking and the Office of Fair Trading.

It believes this, and four other recommendations, should be included in the FCA’s objectives.

The other recommendations are that the FCA develops reliable estimates of its own cost effectiveness, the Government differentiates between retail and wholesale consumers and the FCA and the financial services sector communicate better with each other. It should also revise the current legislative proposals to ensure the FCA is properly accountable to Parliament and that tools are available to enable the required level of explanation from the regulator.

Andrew Tyrie, chairman of the Treasury Committee, said: “We need a fresh approach to regulation. The plain fact is that the FSA did not succeed in protecting consumers from spectacular regulatory failures. The mis-selling of PPI and endowment mortgages are just two examples.

“The FSA is not only expensive, for which the consumer always pays, but many have told us it has also become bureaucratic and dominated by a box-ticking culture.

“If we are not careful, the FCA will become the poor relation among the new institutions. But it is one that will matter most to millions of consumers.”