MM Leader: UK IFAs need a stronger voice in Europe
UK financial regulators will essentially be supervisory arms of a European regulatory regime.
That was the clear message articulated last week by FSA chief executive Hector Sants as he set out the future role and responsibilities of the Prudential Regulation Authority.
Sants told delegates at the PRA banking conference in London that the new prudential regulator will need to spend significant resources looking to influence the European agenda. But he also warned that UK firms and trade associations needed to increase their European lobbying efforts to ensure their voices are heard.
It is not a new message to point out that European regulators exert significant control over the financial services industry but the new three-pronged European regulatory structure tightens this grip.
Aifa director general Stephen Gay has admitted Aifa does not have the resources to lobby properly at a European level. Gay laid bare the trade body’s funding issues at last week’s PIMS conference by revealing that IFA contributions do not raise enough to pay the wages of Aifa’s staff.
He says he believes the “substantial” gap in funding required to lobby effectively in the UK and internationally can be addressed through new membership charges and getting more advisers to join.
We are likely to have to wait for the results of Aifa’s strategic review to find out how it will try to persuade members to pay more and sign up a significant number of new recruits.
The announcement that M&G and Royal Bank of Scotland are to join the 16 other associate members of Aifa attracted some criticism but there is nothing wrong with providers contributing towards the funding of IFA lobbying efforts as long as appropriate boundaries are set.
European regulatory developments, including changes to Mifid, the packaged retail investment products directive and the responsible lending and borrowing directive, are likely to have a profound effect on the adviser market.
The intermediary landscape in the UK is noticeably different to the bancassurance-dominated advice culture in much of Europe and it is essential UK IFAs have a strong voice to fight their corner.
It is in all IFAs’ interests that this voice is as powerful and well funded as possible to battle pther competing interests which are looking to shape the European regulatory agenda.