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Andrew Tyrie calls on FCA to scrap approved persons for advisers

Treasury select committee chairman Andrew Tyrie says it is “absurd” for advisers and other regulated individuals to still use the “discredited” approved persons regime when it is being abolished for banks.

The Government is replacing the approved persons regime for deposit taking institutions – such as banks, building societies and credit unions – with a senior management regime.

The aim is to introduce far greater individual responsibility and reverse the burden of proof so senior staff have to prove they are innocent.

The Treasury had initially planned changes for the entire sector in July but changed its mind in October. Experts have warned scrapping the regime for advisers could cost millions and take more than two years although the Treasury says there would be no re-authorisations.

The parliamentary commission on banking standards wanted the move introduced for banking first but Tyrie, who chaired the commission, has now hardened his position.

Speaking in the House of Commons yesterday, Tyrie said: ”Everyone agrees the approved persons regime adds little or nothing. Yet over the past few weeks we have discovered this discredited system is going to survive in legislation.

“In doing so the regulators are, in my view and many commission members, perpetuating a myth that the approved persons regime affords any real protection.”

Tyrie said the regime will still apply to more than 20,000 financial services staff such as fund managers and some banking staff.

He said: “That is unfinished business as the banking commission only had a remit for banking. But it would be absurd to have a regime for one part of financial services, which has so clearly failed in another.

“I do hope the Government will encourage the regulator to look again at this to extend the coverage of the new regime and remove the approved persons regime.”

Labour has long called for a fiduciary duty to be imposed on all customer-facing financial staff, including advisers, in a bid to significantly bolster Treating Customers Fairly rules.


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. “The aim is to introduce far greater individual responsibility and reverse the burden of proof so senior staff have to prove they are innocent.” This sentence caught my eye and made all other words in this article meaningless by comparison.
    Are we living in Zimbabwe? Oh no, I forgot, we are in the United Kingdom, where regulated individuals are afforded slightly less human rights. Happy Christmas!

  2. Absolute madness. As far as banks are concerned this places the burden on the managers which could well be considered a move in the right direction. But do we really want those who work in these organisations not to have some form of Regulatory Approval in addition to the vetting they receive when being taken on? Do we really want less than squeaky clean personnel in our banks?
    But for advice firms Approved Persons is in my view vital. That it didn’t work before is no reason to scrap it now. Rather ensure that it is tightened up and made to work properly.
    Do we really want ex-bankrupts, ex-felons or those censured or dismissed for bad practice and so forth running around as advisers? We have had too many cowboys phoenix-ing from one firm to another and continuing their bad practices as they jump from place to place.
    Approved Persons should be made much, much tighter and include a requirement for minimum capital adequacy for each individual as well. Maybe then we will all have less to pay to the FSCS.

  3. The burden of proof should not be removed. We don’t live in France, let alone Zimbabwe. For once I disagree with Andrew Tyrie.

    If anything the approved person regime should be extended NOT removed.

    All senior bank staff as well as investment and mortgage advisers should be on the register and MEANINGFUL information should be recorded on the FS register, NOT wait until they have been sent down for murder! I would accept the FCA putting the argument I am having with them at the moment on the register provided it included my side of the argument so the consumer could decide who the shysters are in this case. It would also then mean if the FCA accept their errors, their apology could published too as I am expecting one.

    As an ex banker who saw people asked to leave rather than sacked for fraud or embezzlement, the general public should be able to expect that all financial services staff have been veted AND that they are not allowed to move from one positions to the next, getting wiser and wiser to the lack of systems and controls and work their way up the gravy train whilst carrying out these actions.
    This may happen in other walks of life (I know of someone who was a Policeman, moved to the firebrigade under a cloud and then moved firestation as the rest of the blokes refused to work with him as he was a thief. He is now a local councillor and involved with planning decisions!

  4. @Harry – Fespite me being someone who played the “man of straw” card in teh Keydata argument with the FSCS bully boys Herbert Smith, I agree with you about the capital adequacy issue, but ONLY if the defend gets equality of arms, which is not the case currently with the F-pack who have unlimited coffers to pursue an adviser as you i suspect are finding out Harry with the small Keydata cases you have. Your advice was sound Harry from what I saw of it and yet you will end up having to pay for the FSA’s errors AND even more disgustedly Dr Debbie Harrison of the FSCP and CASS Business school ha not even been asked to provide ANY evidence with regard her inside knowledge of the Keydata debacle!
    @Dr Harrison – You said and I quote from your email of 19th March 2010 ” in answer to your very just questions, I was taken in by Keydata and the ease with which this happened made me feel that I couldn’t do this sort of work in future. Do feel free to contact me if you have any further questions.” Why have you not answered any of my questions or those of other advisers or reporters since then? Surely your position at the FSCP is untenable in the circumstances and your being quoted on BBC tv this week on pension matters is an insult as such.

  5. @Phil

    There comes a time when one has to be phlegmatic. I know of several cases (as I’m sure we all do) where the law is seen to favour those with the biggest wallets. I’m afraid that is the justice system. I happen (with others) to be caught up in it.

    However robust your case may be the outcome is still often a lottery. Defending one’s position in court in this instance will cost more than paying the ‘hit’.

    It really isn’t that dissimilar to a Mafia protection racket. As an unincorporated sole trader I have but one crumb of comfort – I get a 40% discount – courtesy of Mr Osborne.

    Yes I could well produce plenty of bile, but I don’t think it would get me anywhere. So a stiff drink and move on. If I believed in Santa Clause I may well hope that the judge in the forthcoming test case (when? In the next 10 years?) will give the plaintiffs are right kicking. That’s about a likely as Mr Wheatley ringing me up and asking for a job.

  6. @Harry- You are far to forgiving mate. As I posted somewhere else DO NOT do business with me if you think you are going to get away with shafting me.

    And that includes the F-pack and all it’s minions. I have a VERY long memory and I will wait until i am about 85 to 87, i.e. when the longstop was supposed to have applied sand if they want to continue playing their silly games, then let them try. I am only 48 at the moment, so they are safe for now…….

  7. @Phil

    I’m no Don Quixote!

    Happy jousting!

  8. @Harry – I am…… read the book, not seen the film. Is there one?

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