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Shift in power
As we move closer to a general election with William Hill offering odds pricing the Conservatives to win the election at 2/7, the possibility that a blue-tie-wearing party governs the country is high.
This brings with it the expected fulfilment of the pre-election speech that the Tories will give financial services regulatory power back to the Bank of England.
The ongoing infighting between UK Government, the FSA and the Bank of England over bank bonuses further strengthens the Conservative party’s argument that the Bank of England should be at the centre of the UK regulatory system and the FSA should be closed down.
Lord Turner conceded last year that neither the FSA nor the Bank of England had a formal, legal responsibility for maintaining the financial stability of the system? I have worked in financial services for nearly 30 years and cannot recall a time when the demands on the primary financial regulator have been so high. A few examples follow.
There are cries for the rapidly expanding Sipp industry to be more tightly regulated.
The increasing popularity of distributor-influenced funds in preparation for the implementation of the RDR needs regulatory guidance.
Many advisers are beginning to base their businesses on recurring and fee-based income models. But distributor-influenced investment advice is very like the popular broker bonds sold back in the 1980s. Think about what happened to them? Court case after court case to prove misselling due to IFA-advised broker bonds underperforming and carrying expensive charging structures.
Guidance on distributor influenced funds is needed soon so new investment scandals can be avoided.
I have always found the FSA open to industry comment on its consultation proposals and the latest RDR paper CP09/31 has invited responses to its proposals by March 16. The FSA will even call those regulated for a chat on pertinent issues.
If we step back for a minute, will we not be better served by helping the regulator do their job by assisting where we can?
Apart from the shocking mistakes made in the last few years, such as the near total collapse of the UK banking system, does the regulator know that the transition RDR qualifications list issued in CP09/31 needs a rework to make it complete?
Does the FSA know that if they make a mistake and release hundreds of IFAs’ email details they cannot simply say sorry and then fine those regulated when making a similar mistake?
Kim North is director of Tech and Tech
