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Daniel Godfrey: FCA is making all the right noises

Godfrey-Daniel-IMA-2013

It was with a growing sense of optimism that I read the FCA business plan.

The new FCA objectives instil confidence that from April we will begin to see a more streamlined and proactive approach to regulation. But what I found most striking was the alignment with my own vision for the IMA and the industry.

Knowing that we share the same goals reassures me that we can work as trusted partners and that gives us the best possible chance of succeeding in helping consumers secure their financial futures.

An emphasis on working together is a crucial message that shone through and is a sentiment that is strongly reflected in the IMA’s priorities. I was delighted to see Martin Wheatley stress the need to avoid working in isolation.

The more that the FCA understands the impact of its presence on the market, and the better its knowledge of commercial practice, the more effective it will be.

The FCA should be a firm but fair regulator and the mood music of the business plan indicates a willingness to be responsive to commercial needs whilst not compromising consumer protection.

Regulators, Government and industry need to pool resources and adopt a joined-up approach to developing the UK financial services sector.

The UK asset management industry has already taken the first steps towards that goal by working on the implementation of a Financial Services Trade & Investment Management Promotion Board, as proposed by The Chancellor in his Budget. The IMA has been asked to act as the leading trade association, working with The CityUK, and we are determined to make it bear fruit.

Another shared objective is to build trust in the UK financial services industry. The only way we will get people saving and investing is to show that we can be trusted.

Numerous scandals have given consumers reason to question the integrity of UK financial services over the last dozen years and more. The whole industry needs to work hard to reverse the damage done by a few.

The FCA has committed to being more pro-active, spotting problems before they arise and taking tough and decisive action where mis-conduct does occur.

For our part, we must gain the nation’s trust by demonstrating that we are always working to develop the highest possible industry standards.

Finally, I am delighted to see the focus shift back onto the consumer.

The FCA will have a very clear consumer focus and, the way I see it, everything we do as an industry should be to benefit investors and potential investors. If we do a great job for our clients, profits and growth will surely follow.

The recent changes to the FSCS funding model provide a perfect example of how the industry and regulators can work together to produce the best result for investors.

Despite the well-qualified intermediary market, providers of retail products should take responsibility for their products being suitably designed and packaged. This is why the IMA was so pleased to see the retail pool of the FSCS being extended to include PRA firms.

In common with fund managers, they now have a direct link to the compensation related to their independent distribution channels.

Additionally, the FCA has confirmed it will ban products it considers unsuitable for retail investors. The industry can and must play a role as whistle blower for the FCA regarding products that are not fit for purpose.

The best result for investors is the core purpose not only of our existence, but the FCA’s too. To paraphrase Rick at the end of Cascablanca: “Martin, I think this is the beginning of a beautiful friendship.”

Daniel Godfrey is chief executive of the Investment Management Association

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