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Categories:Politics,Regulation

Andrew Tyrie blasts FCA over 'mindless' data collection; eyeing RDR damage

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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.

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Readers' comments (10)

  • I wish this politician luck in his quest! However, the Treasury Select Committee was not able to prevent the introduction of RDR which had been criticised by Parliamentary debate in the House of Commoms. Not only has the RDR destroyed a much needed source iof independent financial advice for thousands of ordinary folk it also caused many IFAs to stop working because they were unwilling or unable to requalify to a new degree level exam. I know because it has happened to me and now I cannot work I have to sell up to clear a mortgage designed to run another 5 years. This is just one IFA's problem thanks to the unnecessary action by the FSA and the RDR demands. Andrew Tyrie has his work cut out if he thinks he can control the regulator now called FCA.

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  • Harry Katz

    Andrew Old Chap

    You have shown yourself to be well meaning and a rarity in Parliament – Erudite.
    But I don’t think you have really come to grips with the Canaries.
    Firstly I would remind you of your meeting with Sir Hector. Basically you can say what you like, but the message from Canary Wharf is “Get Stuffed. You can’t touch us”. So if I might venture a suggestion, this is where you should start. Make the buggers fully accountable. Unless you do that they proceed unfettered.

    The next point concerns data gathering. They may be unaccountable but they do like to impress others with their own importance. So looking busy is part of this. It is not that different from the old system of digging holes and then filling them in.

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  • I didn't think the problem was trail commission. I thought the RDR was about addressing commission bias. Maybe I need to write to Mr Tyrie and remind him. He is, of course, perfectly correct about "mindless data collection". The Gabriel report is a classic example. On the other hand I cannot take issue with the desire for greater professionalism in our industry/profession. What we as IFAs require to do is run with the good aspects of the RDR and try to change that which holds us back. We and our politicians also need to recognise we are not the only profession with these problems. Regulation stifles just about every aspect of business and profession in the UK. Just ask any nurse, teacher, construction engineer or anyone running a small business. They all can't wait until they retire and such did not used to be the case!

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  • Nice to see that somebody at least recognises that there is a fiscal cost to regulation.

    Sorry you felt you had to leave Derek, I've come across you before via finserv and you always seem to be a very decent honourable fellow with a genuine interest in helping clients. However, the one part of RDR I had no issue with was the qualification element there were and probably still are too many IFAs and Bank advisers who stumble around not really sure of what they do and don't know. Not sure the SPS system is really fit for purpose though it's a bit too easy I think. And the qualifications required were level 4 which is not degree standard (a bachelors degree is level 6) the work a first year on a bachelor degree would be expected to do is level 4 - so they were only really a little step up from A-level standard.

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  • Alan Lakey

    Knightly makes a sound point here.

    Let's not let anybody, Tyrie/FCA or agenda-driven observers to twist the original intentions of the RDR.

    The FSA made the point that it was to rid commission bias, even though their own report by Charles River Associates confirmed that bias was perception rather than reality.

    The RDR could have been averted if the FSA had opted to cap commission and allow grandfathering.

    The financial saving would have been immense.

    Add to this the retention of the IFA/tied/multi-tied situation and the current market would be a deal rosier than it is.

    @Harry Katz makes some excellent observations and this serves to confirm that until there is some independent body that is able to stop the regulator from doing something stupid when it knows that it is stupid then there is no hope for any of us.

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  • Phil Castle

    I agree with Alan and Harry on this.
    What I think is good, is that the message about RDR from people like Harry, Alan and I remains the same, i.e. it was a sledgehammer to crack a nut (a very expensive one at that) and other than one or two like Derek, most of us are still here. Derek would have been I suspect if he'd more than 5 years to go, which is why some of us argued for grandfathering even though we were only in our 40's because we wanted to keep the experience in the industry while replacements were trained.
    The TSC were given the full picture and spoke up (thank you Andrew Tyrie for that), but Sir Hector the undeserved and Sheila Nichol just smirked and carried on. Now Mr Wheatley is confirming what many of us warned of.

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  • Harry Katz

    @Phil

    I might not be an outright fan of RDR or indeed some of the dafter aspects of regulation, but my gripe is mainly with the stupid ideas of restricted and independent. It blurs independence and hampers restricted – the worst of all worlds.

    However I do see merit in abolishing commission. I would have preferred all commission to be abolished as I also think the tiered system of regulation is daft. Why have different regimes for mortgages and protection? Too much talk and not enough action on the concept of a level playing field.

    Nor do I see anything wrong with qualifications. On their own they don’t amount to much, but with commercial sense and experience they do help. I sympathise with those who regard the current virtual monopoly of the CII with distaste for their policy of milking candidates and treating them as superannuated schoolboys.

    I find the bleating of the older IFAs disingenuous in the extreme. I guess I am one of the older IFAs – 68 in two weeks’ time. However anyone who was in financial services anytime from the 1980’s onwards must have known that qualifications were going to feature highly on the agenda. If they didn’t realise this they must have had their heads in the sand. The LIA was promoting education, followed by the IFP and SOFA. Then latterly the CII. (Who under Bland considered our work subordinate to that of insuring Ford Cortina’s). In essence there are none so blind as those who will not see.

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  • always did agree with updating qualifications, but for new entrants to the advice industry on a compulsory basis plus voluntary for those already 'in'. I felt granfathering was the right approach as I was around 65 when it was all being dicussed and not being of academic mold felt it was too much to take exams for something I had been doing for many years. I did my vocational degree when I was in my 20s, but it was a struggle for me. Since then I have taken work related exams, but none for years. I had a client bank of around 300 which I no longer can help. I was not fully persuaded by fees argument, but would have coped. Philip, there are a few thousand IFAs who like me have lost their livlihoods owing to RDR and if I were aged less than, say 50 then maybe I would have taken the qualification. Now, where do I sign on for human rights violation compensation?

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  • DH

    I agree and I think the above comments say it all

    I would be interested to know what Martin Wheatley's reply is ? and this is reported back to MM.

    I fear the best we may or Mr Tyrie gets is some lame "FCA spokesman/woman" spouting on about how important and necessary this data is for them to be able to regulate affectively and judge the risk each and every firm is to the consumer.

    At worse we will get silence and the vision of tumbleweed passing past the TSC window !!!

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  • Without having to had to hand evidence that would have been difficult, if not impossible, to refute, asking Hector Sants back in March 2011 whether or not the FSA had any sort of prejudicial agenda against small IFA's was pretty much a complete waste of time. He just said no and that was that. George Mudie had no comeback at all and so the proceedings moved onto something else.

    Andrew Tyrie must now realise that the FSA definitely DID (and maybe still does) have exactly such an agenda and it lies with Hector Sants successor to sort out the dog's breakfast that he's inherited. Time will tell if he's up to the task.

    But, for all that, I still don't understand why Tyrie never says anything about the Statutory Code of Practice For Regulators. It's there, it's Law and surely it ought therefore to be enforceable. Why the tacit refusal even to acknowledge its very existence?

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