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Categories:Other,Regulation

FSA data overload

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In the movie Raiders of the Lost Ark, the item that so many sought is stored anonymously in a massive warehouse. In my last column, I bemoaned poor statistical practice and even poorer research. I now note that the FSA is looking for even more data once adviser charging takes effect.

Yet there have been several well informed comments from regulatory circles that the current data from the RMAR is not looked at in any detail, if at all.

It is true that for adviser charging to work, we need to monitor its introduction but for this to have impact and influence, we need to publish this data as soon as possible after its collection and analyse it.

Collating this data may not be possible in current backoffice systems as it may require current providers to develop new interfaces and outputs, leaving IFAs with the risk of using manual alternatives, whatever method they decide upon.

Of course, if we were really smart, we would be using this data not to control but to enhance and develop firms.

By slicing and dicing these statistics, we could build a body of data as to trends and levels of charging. If we then were to collate client feedback, we could by accident and some design produce meaningful treating customers fairly management information.

So, instead of responding to this paper with gritted teeth and a mantra of no more stats, we should engage and make this element of regulation work for us.

All too often, we simply comment that we need to start to suggest alternatives and to avoid being seen as blockers. Instead, let us be known as innovators and those in pursuit of service excellence. Statistics are a tool to be leveraged.

In the same vein, products need to be more part of the business instead of a function of the firm.

We also need to band together and insist on re-registration being allinclusive. Investment bonds have been, for many years, the default wrapper for investments but for many with-profits bonds, recent lack of performance has not led to encashment as earlier gains would still cause a tax liability on encashment.

The Government is losing out in corporate tax, the client is losing out on performance and the only winner is the provider which continues to charge.

Now if inter vivos transfers were possible, then the Government could gain taxation, the client’s performance could improve and the money could move without triggering personal taxation.

This would really make transition work. We need to move to the US system, where assets move at the flick of a switch and if they don’t, the chief exec faces sanctions from the regulator.

If bonds are left to one side, then transition or re-registration will be a flop and that would be regrettable.

Collecting data is like collecting artefacts, it is only sensible if you process it. Storing data in ever increasing bundles is plain daft and a waste of the sector’s time and money.

There is no doubt this data now being requested is important but it needs to be used to inform just as soon as possible as inter vivos transfers of investment bonds is overdue.

This needs the help of the Treasury as it will increase its tax take and not at the expense of the client.

Robert Reid managing director of Syndaxi Chartered Financial Planners

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Readers' comments (2)

  • It's a perverse irony that the longer the list of the FSA's failures grows, the more regulatory functions it seems to want to take on, in the process burdening the adviser community ever more with red tape and reporting requirements of questionable value.

    We seem to be moving ever closer towards a police state in which we have to record and report every single aspect of how we run our businesses, despite the fact that the FSA is patently unable to handle its present responsibilities.

    For at least the past decade, the industry has been calling for a breather from the relentless slew of new regulatory initiatives, some time to settle down with what's already been imposed. Yet to all these pleas, the FSA seems still to remain resolutely oblivious. Is it any wonder that the industry is buckling under regulatory overload?

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  • I agree with you but Adviser Charging is flawed and so proposing how you are getting data is a waste of time. We cannot provide the data and have responded to the FSA accordingly. All this data is based on retail investments and not advice, we have an issue regarding VAT, pre RDR investments are causing us a problem and thiose forms already on the adviser charging page are being screwed. Please excuse wording but Adviser Charging is unclear.

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