IMA and ABI need a single voice to influence regulation
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The Investment Management Association and the Association of British Insurers need to speak with one voice in order to bring about regulatory change, says financial services academic Professor Merlin Stone.
He told the IFP annual conference the banks have had much stronger engagement with the regulator than the investment industry.
Stone, a visiting professor of marketing at Oxford Brookes, Portsmouth & De Montfort Universities and head of research at customer consultancy firm The Customer Framework, said banks have been tough with the FSA from the beginning. He said: “The investment side of our industry is extremely fragmented between the different organisations like the IMA and the ABI, and it has never really spoken with one voice. There are also lots of small businesses that have been put out of action by the regulator without recourse.
“If the IMA and the ABI had spoken with one voice earlier on, as the custodians of far more wealth than the banks, the outcome might have been different but they were afraid to do anything.”
IMA director of wholesale Guy Sears says: “We do not recognise the state of affairs Professor Merlin Stone refers to. We welcome proposals to ensure that, under the new regulatory structure, consumers get a fair deal. Restructuring the regulators to address consumer detriment, which has resulted in the investment management industry paying out £233m in compensation this year, is definitely positive.”
An ABI spokeswoman says: “We are confident we punch our weight in representing the insurance and investment industries and have worked closely with bodies such as the IMA to ensure a coherent and effective response to the challenges of the financial crisis and new regulatory landscape.”
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Readers' comments (1)
Bryan Foss | 14 Oct 2011 7:57 pm
Traditionally UK banks have appeared to be effective in influencing regulators as a group, including via the BBA where Angela Knight has been a consistent voice. However this has become less effective more recently, in part due to changes in public perception and the EU preference for rule based regulation.
By comparison many insurers have believed that the regulator looks badly on collaboration, so while some informal conversations take place the industry finds it difficult to gain sufficient regulatory influence as a whole.
RDR is an example where banks and insurers could collaborate together to highlight the significance of the unintended consequences likely to result for consumers - and to highlight the changes in regulatory approach that could help.
Other industry influencers (including Prof. Stone and other behavioural economists) need to demonstrate the negative impact of recent regulatory stances on competition and consumer choice.
A key current question is whether the regulator now acts as if it is accountable (and who to) for its decisions, actions and outcomes, when its funding is clearly raised from the consumers it does not seem to be delivering sufficient benefits to.
Good outcomes arise from checks and balances, including proper inputs to an 'impact analysis' of planned regulatory changes. Where insurance industry players have sub-optimal ways of combining to put the case for influencing the regulator, it isn't clear that we will end up with the regulatory balance and consumer market we will need.
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