Advisers have expressed “mounting frustration” over rising regulatory costs and the implementation of the RDR in a survey of all regulated firms.
The annual FCA Practitioner Panel survey, conducted in February and March and published today, shows 37 per cent of all firms believe the FSA was ineffective.
The FCA says much of the negativity was driven by small firms that have been affected by the implementation of the RDR in the last year.
The survey says: “Respondents believed that RDR was pushed through with no real thinking about how it would work in practice; the timescales and costs of implementation were unclear, and this resulted in the industry being hit with higher costs.
“There is strong underlying belief that ultimately the RDR does not benefit consumers as a large proportion of the population is now excluded from receiving advice.
“The implementation ‘on the ground’ has been poor and firms feel that there has been a lack of practical assistance and guidance.”
In addition, small firms feel “overburdened” with regulation and that they are not treated fairly over costs compared to large firms. IFAs and general insurance brokers complained about picking up additional costs from misselling scandals that they were not involved in.
Among all firms, the FSA’s key failings were identified as poor implementation of Treating Customers Fairly and the RDR, not being proactive, not doing its job properly in tackling misselling and being too bureaucratic and focused on red tape.
When asked what the negative consequences of regulation are, 51 per cent of small firms said lower profit margins. Almost four in 10 said it requires more resources, a quarter said inconsistent legislation, 24 per cent said it increases product prices while 20 per cent said to forces a withdrawal from certain sectors and 20 per cent said it forces a withdrawal from certain customer groups.
Firms also said they found the FSA website and call centre “very frustrating” and can not always get answers to their questions. They want more specialist FCA staff to deal with specific areas.
The survey shows 55 per cent of all firms were dissatisfied with the regulator, including 16 per cent who said they were extremely dissatisfied.
FCA chief executive Martin Wheatley says: “From this last survey undertaken at the FSA, it is clear that firms believed there are some areas which could be improved.
“As the FCA, we have changed our approach and the way we regulate, and we are becoming a more forward-looking, predictable and engaged regulator which acts from a position of greater understanding of the industry.”