The banks have caused a financial crisis of a scale unseen in the lifetime of any of Money Marketing’s readers. Perhaps the overall cost of regulation does need to increase although I remain unconvinced. However, the principle should be simple – those who caused the problem should pay for the answer. The IFA profession and wider intermediary community did not cause the banking crisis but we find ourselves victims, caught in the middle of the shock sweeping the economy.
The FSA must revisit its fee block proposals and rebalance its costs. The intermediary community is already being asked to fund new and expensive regulatory proposals, to hold more capital, to implement the retail distribution review and to fund the scandalously high costs of the Financial Services Compensation Scheme (another regulatory failure).
The regulatory burden on IFAs has reached proportions that are intolerable. A key consideration for many firms is cost-cutting to stay in business and serve their clients. It is time for the regulator to step back and reassess what it is asking of firms. Is this the right time to press ahead with new initiatives such as upgrading the Gabriel system? Surely, a period of consolidation is needed when the FSA can regroup, focus on what matters (sound supervision of firms) and leave aside new initiatives until the economy is better balanced.
Regulatory costs are ultimately met by the public. Our clients will suffer if advice gets more expensive. Fewer people will be able to afford it or there will be fewer firms in business to offer it.
At a time when independent financial advice has never been more trusted, for the regulator to restrict access to that advice looks like a regulatory failure in waiting.
Aifa is lobbying the FSA to review its funding proposals to reduce the financial burden on firms. Some of the smallest firms may not be expecting a significant rise in FSA fees but they will be swept up by the tide of increasing regulatory costs. This is the time for the profession to speak with a single voice.
Let us not be hoodwinked into becoming a split camp. Join Aifa’s campaign and send in a response to FSA. Full details of what to say and when to reply can be found at www.aifa.net.
Chris Cummings is director general of Aifa