Nic Cicutti: Bad timing for FSA in battle with MPs
Talk to anyone who has met Andrew Tyrie and you will hardly hear a nasty word said about him.
Here is someone who has risen to become chairman of the Treasury select committee after years as an adviser to both John Major and Nigel Lawson, when they were Chancellors in the mid to late 1980s, as well as being a former chief economist at the European Bank for Reconstruction and Development.
Everyone I spoke to describes Tyrie as urbane, determined to carve out a stronger role in for his committee as a democratic overseer of the political process in so far as it relates to economic and financial matters.
Yet in some quarters at least, he is also portrayed as Howard Beale, the demented anchor of a TV show in the film Network, who famously asks his viewers to stick their heads out of their windows and shout: “I’m as mad as hell, and I’m not going to take this any more!”
The only way to justify such a bizarre image is remember that, in the eyes of some, Tyrie is involved in an arm-wrestling contest with the FSA over the timing of the RDR.
As we know, in recent weeks the Treasury select committee published a report calling for the January 1, 2013 implementation date to be put back a year to give advisers more time to meet the QCF level four qualification requirements. MPs also want a softening of the cliff-edge deadline for some advisers.
As an outsider, one can understand the committee’s logic. In the preceding months, it has been bombarded by submissions arguing that the RDR’s implementation would lead to an exodus from the IFA sector.
One document I have seen from the redoubtable Garry Heath even suggested that, including back-office staff, up to 20,000 people might be forced out of work as a result of the RDR.
Scores of statements of a similar nature have made some MPs afraid of being cast as responsible for their own little wave of unemployment statistics, in addition to that already being overseen by the Chancellor.
Not only that, there is also the issue of the FSA itself. Its own performance in front of the committee has been typified by a lack of preparation, the use of incomplete statistics and poor research generally, as well as a touch of arrogance in the way they have attempted to respond to committee concerns.
For example, what bright spark at the FSA decided to put out an embargoed press release to the media within hours of the select committee report, in which it dismissed the key recommendations made by MPs?
Did anyone not realise how insulting that would look, not just to MPs, who assume that anything they say is of amazing importance, but also to neutral observers?
Did anyone at the FSA not look at Andrew Tyrie’s CV? This is a man who wants his committee to have a real say in important financial matters.
Last year, he fought for the right of not just of veto but also dismissal over the appointment of the head of the Office for Budget Responsibility. He is on record as wanting similar rights for MPs with respect to the governor the Bank of England.
How did the FSA ever imagine it would look when he received their pre-planned letter within hours of his committee’s report?
Not only that, but it is becoming clear that, in key respects, the regulator still does not have well thought plans with regard to issues such as clarity on platform fees and legacy commission. Both can be resolved fairly quickly, but there is less and less time left. The issue of VAT also needs to be resolved - although that is largely a matter for HM Revenue and Customs and not in the FSA’s gift.
I am not convinced either by the plaintive cries from some providers - including the Pru and Zurich - that they need more time to get their systems in place, I have heard much the same whinge every time any legislative or regulatory change has come into force and they have somehow managed to overcome the problem. I expect nothing different this time
But that still leaves the issue of the FSA and how it reacts to the Treasury select committee and many IFAs’ raised expectations in the wake of its report.
It has a number of options. One is to capitulate to MPs’ demands. That will not happen. The second is to make a few concessions. That was always on the cards even a year ago. The fact that it may save a few hundred IFAs from meeting the RDR’s full requirement for a number of months may head off Andrew Tyrie.
Right now, the only thing that saves the FSA is that the demand for a one-year delay to the RDR is palpable nonsense.
That and the fact that Mark Hoban, the Treasury minister responsible for such regulatory matters, has so far sided with the regulator but a quiet word in his ear and all that could change. If I were the FSA, I would be trying to discover some people skills.
Nic Cicutti can be contacted at firstname.lastname@example.org