Cummings believes Hector Sants’ now infamous “BE VERY FRIGHTENED” speech ushers in a new draconian regime in which front line supervisors have the power to holler “off with their heads” at any business line or idea that does not fit their more prescriptive thinking.
Such a move is full of hazards. The potential dangers are well articulated by Sants himself in his speech last month. He warned this “fundamental change” in supervision carries significant risks that judgements may not be right with hindsight and that too aggressive an intervention will stifle innovation and “reduce risk to a level that inhibits economic prosperity”.
This move to out-comes focused regulation hands significant extra powers to the FSA’s front line supervisors, many of whom have little experience in running an IFA business.
Advisers could be forced to change business plans or ditch new projects on the whim of such supervisors.
In this post-Northern Rock regulatory world is there a danger such supervisors will be overly cautious in their interpretation of “foresight regulation” and unwilling to accommodate new innovative structures or initiatives?
The IFA sector has always been proud of its ability to reinvent itself to deal with whatever market trends, the Government or the regulator has thrown at it over the years.
Is Chris right? Could innovation in the IFA sector be threatened by this regulatory move?
Would IFA innovators like Ken Davy, Paul Hogarth and Tom Baigire have been able to achieve what they did if FSA staff were placing barriers in-front of their new ideas?
Is there a danger potential new innovators in the IFA space that we are yet to hear about will be snuffed out before they get a chance to shine?
Let me know what you think.