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Apfa: Treasury must target FCA in £10bn cost-cutting drive

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Apfa has written to Chancellor George Osborne demanding the Government targets the FCA as part of a drive to improve regulation.

Business secretary Sajid Javid promised the Government would seek to cut £10bn worth of red tape shortly after the election.

However, advisers responded sceptically to the announcement, and now Apfa is calling on Osborne to makes sure FCA’s work is scrutinised.

In the letter, Apfa director general Chris Hannant says it is unclear why the financial services sector has yet to be subject to initiatives like the red tape challenge during the last Parliament.

He says: “Although we understand that regulatory action was required in the wake of the financial crash, the financial advice sector is struggling under the current regulatory burden and with a regulator that appears unable to abide by the same budgetary principles it applies to those it regulates.

“Other industries which come under the purview of an independent regulator, such as energy and water, have been part of the red tape challenge, for instance, and we fail to see why this should not be the case with the finance sector.

“Considering the recent changes to the pensions and savings landscape, anything that discourages consumers from access to professional financial help should be of the utmost concern to the Government.”

In particular, Hannant calls on the Treasury to place a duty on the FCA to consider economic growth and the impact of its work on the contribution of financial services to the UK’s GDP.

He says: “We believe that not having such a duty led the FCA’s predecessor, the FSA, to develop policies in isolation, without considering the full impact on the industry; for instance, adviser numbers have fallen by nearly 15 per cent since the implementation of the RDR.”

The FCA should further be required to publish a “regulatory scorecard” to show its progress, he adds, noting that the financial services watchdog should also seek to make greater progress in cutting the existing regulatory stock, with a target of the FCA’s handbook being reduced by a third in length over two years.

Hannant says: “At a time when more people need to engage with financial services, as the long-term care and pension reforms take effect, it is more important than ever that the regulator is not a barrier to consumers doing so.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 2nd July 2015 at 7:45 pm

    I trust APFA will publish full details of whatever response it may receive from the Treasury.

  2. Seriously ? !!

    You are asking George Osbourne to shoot his prized goose that lays golden (£1.5 billion) eggs !!

    I shake my head in disbelief, the financial slavery, to which we are bound isn’t about red tape and process, its FCA dogma

    The regulator is a highly prized political tool practically and financially that gives total deniability and most importantly it has to be infallible.

  3. Julian Stevens 3rd July 2015 at 4:18 pm

    “In particular, Hannant calls on the Treasury to place a duty on the FCA to consider economic growth”.

    But, in so doing, he’s apparently overlooking Michael Fallon’s foreword to the updated Code of Practice for Regulators in which he states “This Government is committed to reducing regulatory burdens and supporting compliant business growth through the development of an open and constructive relationship between regulators and those they regulate. (There’s a laugh and a half ~ most of those they regulate consider themselves to be pretty much at war with the FCA).

    He goes on to say “The Regulators’ Code provides a flexible, principles based framework for regulatory delivery that supports and enables regulators to design their service and enforcement policies in a manner that best suits the needs of businesses and other regulated entities.”

    So what efforts is APFA making to force the FCA to abide by this Code which, let us not forget, is Statute and thus Law. It’s no good writing to the Treasury saying in a whiny voice: Please Sir, those nasty people at the FCA aren’t playing by the rules. Can you bring them into line please?

  4. Regulation today, if it were a game, should be viewed as you, a firm, playing an online game of chess with the regulations being the board and the FCA being your opponent.

    But while you move your pieces on the software ‘chequer board’, the regulator is playing on a different 3 dimensional version of the game using different software and in a different continuum of cyber space and time. The intention being not to make sure regulations are clear and easy to understand, rather to make them as complicated as possible.

    A firms’ regulatory failure can then be easily based, if public outcry, regulatory face saving or political opinion warrants it, on what will see a positive outcome for the regulator, politicians and even the consumer, regardless of the advisory firm following all the rules and the advice processes to the letter.

    This is because in regulatory land the existence of a consumer miss-buying, possibly hindsight induced by having changed circumstances, aims and aspirations or being wise with the benefit of that same hindsight simply does not compute.

    It may be a laudable ideal but it is neither fair nor reasonable that any industry or profession should be placed in a position by which it is judged upon what it did then, based upon what it should do now with the end result creating a form “Nanny state” protecting consumers from bad decision they may have made themselves.

    Consumers must absolutely be afforded protection, but this should in the technologically advanced times we live in be by way of ensuring the products and investments, exotic or vanilla, that they ‘consume’ are fit for a clearly defined and understood purpose. And that should be a regulators responsibility and definately not an advisers or a ‘manufacturer’.

    Regulation of adviser firms in the way we now see has little purpose these days, if history is anything to go by.

    Scandals, product failures and rip off’s happened despite all the perceived good efforts (now seen as the failures) of previous regulators such as NASDIM, FIMBRA, PIA and the FSA to prevent them. And advisers along with the consumer pay for it, not them.

    Perhaps consumers would be better protected with simpler, straightforward regulation and products, and importantly a consumer financial education programme starting with basic numeracy and literacy skills in schools.

    With the FCA, the scandals, scams and rip off’s will continue, they will just be a little more sophisticated, take longer to expose, will be more costly, with fewer left to pick up the tab and will be driven by technology.

    In fact, rather than regulation, perhaps financial services should be nationalised, prescriptive, non innovative and slowly reactive to change. That way nobody loses out and everybody’s capacity for loss is catered for by way of possibility of loss removal. The vehicle exists, NSANDI.

    Regulation has turned into one of today’s few successful growth industries. It gives it’s workers unsackable career opportunities based upon civil service lines where jobs are not lost for failure, with no need to justify it’s existence, with no responsibility toward the Parliament that gave it life or indeed anybody.

    It needs huge revenue streams to create a real life bureaucratic version of ‘Mad Max’s Thunderdome’ whilst paying what many may see as inflated salaries to the army of accountants, lawyers and other regulatory jobsworths, to support generous pension schemes, to provide health and many other employee benefits all of which many consumers and advisers could only dream of.

    So, as we now know from Ian Dury’s lyrics, “there ain’t half been some clever bastards”, but in our industry most of them in regulation are there with the benefit of hindsight and not vision and even with that they cannot get it right.

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