FSA ignoring compliance code on RDR
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The FSA has failed to follow the regulator’s compliance code in its work on the retail distribution review, according to advisers.
The statutory code was developed by the Department for Business Enterprise and Regulatory Reform in 2007.
It states that regulators should consider the effect that their regulatory interventions may have on small regulated firms, using reasonable endeavours to ensure that the burdens of regulation “fall fairly and proportionately”.
The code also states that regulators should reward regulated firms that have consistently achieved good levels of compliance through positive incentives such as lighter inspections and reporting requirements.
Harvest Independent Financial Management partner Julian Stevens says the FSA is disregarding the statute completely.
He says: “The FSA is totally ignoring this document despite the fact that it is required by law to abide by it. The FSA has thrown small firms into turmoil through the RDR. It is completely disproportionate to the regulatory risk posed by such firms, yet the banks who have contributed greatly to the economic crisis have not suffered at all.”
Stevens says the FSA has resisted calls from many in the industry for regulatory dividends.
He says: “Why shouldn’t good firms be given discounts? Surely that would encourage healthy competition between firms striving to have the best compliance record.”
Highclere Financial Services partner Alan Lakey says: “It is clear to me that the FSA is not keeping to the word or the spi-rit of the code. Given that advisers and regulated firms have to abide by all the regulation in place, it is disappointing to see that the FSA cannot practise as it preaches.”
An FSA spokeswoman says: “We have consulted widely on the retail distribution review and received considerable input from firms of all sizes, including a large number of small firms. We have taken their views on board.”
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Readers' comments (7)
Incompetent Regulators Award Team | 8 Apr 2010 8:23 am
More old Labour Spin coming from Canary Wharf. The Fine Slapping Authority days are now numbered and good riddens when it happens.
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Anonymous | 8 Apr 2010 9:42 am
"We have taken their views on board" "then the views we do not like we totally disregard. unless they came from the banks and other such prestigious institutions, where we hope to gain employment, should things go pear shaped at our ivory tower. We are so powerful we do as we please" More spin than a launderette!
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Derek Gair | 8 Apr 2010 10:24 am
Precisely which small firm views have been taken on board I wonder ? This is another example of going through the motions with little or no understanding of the effect of their actions. Disregarding a regulatory directive issued to ALL regulators is unforgiveable.
Put simply, RDR simply will not work ! Proportionality is not an issue to the FSA.
When RDR does not work, who will pay for the failure ? The FSA ? The client ? The IFA ?
Wont be anyone at the FSA will it.
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Simon Mansell | 8 Apr 2010 11:04 am
Don't be daft - advisers expect nothing less of the FSA and they certainly don't expect AIFA to raise such concerns after all the independent intermediary has been "outlawed" from the normal decent rules of this land and they should jolly well expect this sort of abuse!
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Evan Owen | 8 Apr 2010 11:05 am
Were any 'consumers' consulted, any clients of small firms?
No
Does that mean the FSA has unwittingly created a number of 'risks to our objectives'?
Only time will tell but from where I sit it looks a mess, the great unwashed are being herded towards the banks who are rubbing their thighs with glee.
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Suther Craigland | 8 Apr 2010 1:42 pm
RDR hardee har har more like, its one rule for the fat cats and another for the hard working brittish public
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Julian Stevens | 8 Apr 2010 9:53 pm
For those interested in reading the full text of the Code, it may be found at http://www.berr.gov.uk/files/file45019.pdf.
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