The actions of regulators can have a profound impact on advisers, providers and clients, but all too often we engage too late in the day to shape the final decisions.
With so much regulatory activity to keep on top of, the understandable priority is implementing the latest things that must be done now, rather than responding to early stage consultation documents.
But in my experience on the other side of the fence, regulators (and government departments) start to firm up their views on issues very early on – sometimes even at the point when they are writing the consultation document.
With this in mind, it is vitally important those who care about the future of our sector engage with regulators as soon as an issue appears on their radar.
A case in point is the FCA’s recently published consultation into competition in non-workplace pensions. This primarily covers individual personal pensions, stakeholder pensions and Sipps, but also mentions things like retirement annuity contracts, additional voluntary contributions and so on.
When I have mentioned this topic in talks to advisers in recent weeks, I have sensed a collective yawn about yet another FCA consultation. But as the document itself points out, the non-workplace pensions market covers around £400bn of assets and a diverse range of products, with about 40 per cent of sales being on an advised basis. If the FCA decided to change the rules of the game in this space, we would all notice.
While the FCA is at pains to point out it understands that the workplace pensions market is different from the non-workplace market, most of this consultation document is asking the question as to how far the problems it has seen in the past (high charges, poor governance, disengaged savers, etc) are replicated in the non-workplace sector.
It is concerned that people can get stuck in legacy investments where costs have not fallen, which are not regularly reviewed and where even those who consider switching may be discouraged by the presence of exit penalties of various sorts.
Although the FCA tries not to rush to policy conclusions in this early consultation document, it is not hard to read between the lines as to its initial thinking. For example, we could easily see the role of independent governance committees expanded to cover some non-workplace pensions, and there is likely to be a lot more scrutiny of charges on legacy products.
The FCA is asking for views on its initial document by 27 April and has promised to come back with some clearer ideas by the end of the year.
Something tells me the outcome of this review will be a hot topic among advisers and I would encourage anyone who might be affected to make sure they feed in their views before the regulator’s becomes too firmly entrenched.
Steve Webb is director of policy at Royal London