Treasury select committee chair Andrew Tyrie has hit out at the FCA and Prudential Regulation Authority for “mindless data collection” from regulated firms as he promised to keep an eye on the impact of the RDR.
Speaking at a Centre for Policy Studies fringe event at the Conservative Party conference in Manchester yesterday, Tyrie said regulators must focus on where risks really lie instead of being bogged down in unnecessary detail.
Responding to a question from Money Marketing on how regulators could help boost growth and the impact of the RDR, Tyrie said it is too early to assess the damage from the new rules for advisers, which came into force on December 31.
Money Marketing revealed the Treasury committee was considering an inquiry into the RDR “hangover” last May while FCA chief executive Martin Wheatley admitted concerns over an advice gap in evidence over the summer.
Tyrie said: “We couldn’t carry on with trail commission disguised from customers and RDR was pushed through to clear it so it was the right thing to do. It is having the unfortunate consequence of consolidating the industry into a smaller number of large players which can be damaging for competition and needs to be watched very carefully. The Treasury committee proposed a pause to try and get this right but the regulator rejected that proposal. We are watching it, it’s too early to tell how much damage it has done but we will keep an eye on it.
“The first thing regulators should be doing is looking at the big picture and trying to identify where the really big risks lie rather than spending their time on pointless detail. They have to keep out of mindless data collection and box ticking.
”Anybody who works in a bank or regulated firm will tell you that these guys come in and demand heaps of material. God knows what they do with it, it costs a packet and the client cost is huge but what is the point in it all? They need to be looking at where the risks really lie each time they come to examine that firm.”
Last month, adviser trade and professional bodies united to demand the FCA carries out an urgent review of the retail mediation activities return following adviser anger over increasing regulatory costs.Research from Apfa puts the total industry cost of meeting regulatory reporting requirements at over £10m a year.
Tyrie also said regulators should focus on aligning remuneration with risk in an overhaul of bankers’ bonuses.
He said: “If you want people to do the right thing without systemic risks on balance sheets then we have to make sure risks and rewards are directly related. If you can get short-term bonuses for long-term risks then there is a mismatch in the rewards of that firm.”
The parliamentary commission on banking standards, chaired by Tyrie, recommended bank bonuses should be deferred for up to 10 years as part of reforms to the banking sector.