Financial advisers have hit out at Labour over “soundbite” tactics after it said it would cut £6bn from the cost of business regulation despite the FSA pushing ahead with costly financial services reforms.
Labour’s manifesto, published this week, says the party is committed to helping small businesses and entrepreneurs thrive.
It says: “We will continue to simplify regulation and avoid unnecessary red tape. If it is used correctly, regulation can help drive innovation as well as protect workers and consumers. We will seek to reduce the costs of regulation by more than £6bn by 2015.”
Labour refuses to confirm if the financial services sector would benefit from these planned savings.
In March, the FSA published its budget for 2010/11, which shows the regulator’s costs have risen by 18.3 per cent to £491m from £415m last year. FSA chief executive Hector Sants warns that a more intrusive regulator will cost the industry more.
Highclere Financial Services partner Alan Lakey says the Labour pledge is “electioneering” and is unlikely to result in lower costs for IFAs.
He says: “This is a soundbite that Labour thinks will help them get elected. It is fair to say that financial services is the most over-regulated sector. The retail distribution review is a piece of foolishness.
“It makes the Government and the FSA look like it is doing something constructive but it will not bring any benefits to businesses or consumers. It is obvious that, with higher capital adequacy requirements, higher minimum qualifications and increased regulatory costs, the IFA market is not at all attractive to new entrants.”
Evolve Financial Planning director James Norton says: “Financial services is seen as the whipping boy at the moment and I cannot see any cost reductions on the horizon. This is blatant electioneering.”