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FCA advice boss backs away from cutting regulation

Linda Woodall 700 x 450

The FCA’s newly appointed advice boss has told a Labour fringe meeting that loosening regulation to encourage new players to offer advice “is not the right way forward”.

Speaking on a panel at the conference in Brighton today, FCA director of life insurance and advice Linda Woodall said the watchdog should not reduce regulatory demands to encourage more firms to enter the market.

She said: “I don’t think loosening of regulation is the right way forward. As a regulator we are very much keen to see more advice available, and of course there is already additional guidance through Pension Wise that helps support consumers through the choices that they have to make.

“What’s important is that advice is of the right quality to help people make appropriate choices.”

The comments come as the FCA and Treasury begin the process of the Financial Advice Market Review, which will look at whether there are obstacles to greater provision of independent advice. Woodall acknowledged that much remains uncertain while that process is underway.

She said: “It’s sensible to see what the outputs of the review tells us and then we will focus our efforts in the right place.

“Without ever supporting the provision of poor quality advice, what we can do and have done is to support innovation in the way it is delivered.

“Clearly there are different types of advice and it can present firms with some complexities if you don’t get it right, but there are now, through the benefit of technology, many routes to deliver that advice.”

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Comments

There are 19 comments at the moment, we would love to hear your opinion too.

  1. She said: “I don’t think loosening of regulation is the right way forward – Yes it is. Relax entirely. Just let an adviser with basic entry qualifications register his Interest in providing advice and supervise him. Simple. Same as you do with the banks but actually supervise the adviser rather than what you do with Banks which is “blind eye” and fine every 3/4 years.

  2. What could posdibly be wrong when regulation makes advice a predetermined drop down box based on someone else’s ill informed opinion?

  3. The turkey’s aren’t voting for Christmas are they. The advice sector does not need regulating to the degree it is. Authorise suitably qualified advisers via their professional bodies and monitor their complaints. Otherwise leave them alone to get on with giving advice. Regulate the products and the product providers properly and most of your problems will be solved.

  4. For any new entrant into our business they will shortly need £20k cap ad to sit in a Bank account doing nothing and then have sufficient income for 16 weeks whilst the FCA process their new business application. Huge barrier to entry!

    • Plus all the levies, regulatory fees and cost of PI insurance. And, have you seen the price of postage stamps these days. No one in their right mind should be considering a career in financial services especially as everything they do will be held against them until the day they die. Sobering thought isn’t it?

  5. Richard Broadbent 29th September 2015 at 4:01 pm

    Why do we keep seeing this technology and innovation theme popping up all the time. Why not be honest and admit they have a stand off. The regulator does not want to reduce regulation and advisers don’t therefore want to offer low cost advice due to the risks. Be interesting to see what gives with the Treasury pushing on one side and the advisers and providers refusing to play ball on the other. If people don’t want to operate in the market place the regulator has to ask why, the problem is they don’t like the answer so revert back to ‘we need more technology and innovation’.

  6. Linda Woodall said “the watchdog should not reduce regulatory demands to encourage more firms to enter the market”.

    It is an almost impossible task for an aspiring adviser to open a small new firm in the way that was possible years ago.

    If they work for someone else and leave to start up, their client ‘poach’ activity will not be contractually easy.

    Finding clients who can generate enough fee income to sustain a new business cash flow will be difficult.

    The the fees for the FSA, the FSCS, PI etc are the final straw and I would suggest capital adequacy will make this worse.

    And we wonder about new blood in the industry?

  7. Be careful. I think keeping to this level of regulation actually protects the Independent Advice sector. Loosen advice and you let the banks back in – is that what you want?

    My wish for the review is actually to tighten regulation. Ban all commission to create a level playing field. Make Financial Advice compulsory for purchasing a financial product or for pension freedom advice. This should be funded by abolishing MAS and the PAS and using the funds to issue coupons redeemable at an IFA practice.

  8. Isn’t it amazing how one of the top members of staff in the regulator can say what the regulator won’t do, even before the review has started? I think she has made blunder here by letting the cat out of the bag that the outcome of this forthcoming review is already decided. Hmmmm.

  9. @Marty Y
    Surely you’re not suggesting they make their minds up in advance and that the discussions and feedback they receive from those who actually do the job are just given short shrift! Clearly they listened to us all about the RDR didn’t they? I know the comments I made and those of most of the other advisers I know in advance of the fantastic and successful RDR were ignored/discounted/rejected/shredded perhaps, but I always assumed that was just an accidental coincidence. Anyway our suggestions are hardly relevant to a regulator are they? – we are the enemy that have to be controlled. The very people who ‘they’ have to protect the poor vulnerable innocent consumer public from – It would be like criminals trying to give the police advice on how to police them. Oh well, time to leave the office on a high point.

  10. Perhaps Ms. Woodhall would care to explain exactly what the FCA has done “to support innovation in the way it [advice] is delivered”. Hanged if I can see it. Rory Percival talks about short and concise suitability reports but clearly none of the networks or compliance consultancies are getting just how that might be achieved.

    As for her declaration that the requirements for delivering advice won’t be loosened (perhaps like the straps on a straitjacket), I think we can reasonably infer that to mean that, despite the FCA having made vague noises about it for the past two years, the prospects for any sort of streamlined/simplified advice framework have been resoundingly flushed down the toilet. So the advice gap will remain.

    Meanwhile, the sore of insistent clients festers on and the Treasury is increasingly unhappy with the seemingly irreconcilable conflict between government and regulatory policy on people wishing (wisely or unwisely) to exercise their legal right to cash in their pension funds.

    What a mess.

  11. Having read this article a couple of times and taking that interpretation at face value, all I can say is ………. what a abhorrent individual Ms Woodall is ! a truly gifted child of Hector Sants’s inbreeding program and now “deputy head” girl.

    More demonstration of the FCA’s vice like grip on the throat of financial services, and it seems they are still quite willing to let the world know quite publicly.

    As for Harry’s comments above……… I have never heard so much crap, oppression and restriction of trade of this magnitude is never, and should never, be condoned !!

  12. DH is absolutely correct.

    Regulators, with their innate grasp of how to both keep and expand their functions, are the only people (bar compliance consultants) served by the mire of regulation which chokes the industry.

    It is so simple to construct an advice basis where everybody is insured, FSCS and FOS are enjoined and funded by a product levy. They should observe the statutes and therefore the longstop.

    The FCA would be redundant and there would be a small unit of the Treasury to oversee matters without the need for miles of pages of rules, none of which the average adviser has the time to read or even consider.

    @ Harry Katz – your vision is nonsense and would involve a nightmare world where even Kafka would fear to put pen to paper for fear of ridicule.

  13. This is the standard response of all grotty little bureaucrats through all time and the world over. It conforms exactly to Teasley’s Laws of Bureaucracy 4a (here https://mises.org/library/seven-rules-bureaucracy). Turkey’s do not vote for Christmas therefore no functionary will ever voluntarily reduce their power. They are terrified that once people get a taste for freedom and the ceiling doesn’t fall in (as it won’t) they will be seen to have no clothes.

  14. @John Reilly. The only expression I can give as an answer to your question is a well repeated statement from House of Cards….. “You may very well think that, but I could not possibly comment”

  15. Woodall’s speech clearly demonstrates why the FCA must not be permitted to chair the Financial Advice Market Review. The FCA will come to the table with the preconceived mindset that it was right in in its actions and the outcomes such actions precipitated. It will assume that no change is required to the regulatory landscape. It will seek to defend its position and control the Review process, which it is already trying to do by appointing one of its own apparatchiks as Chair – Tracey McDermott (http://www.fca.org.uk/about/structure/board/tracey-mcdermott). Clearly this is entirely unacceptable. Someone entirely independent for the FCA must be appointed to chair the FAMR as the FCA is demonstrably not to be trusted to investigate its own actions ‘fairly’.

    The Heath Report is largely responsible for triggering the FAMR (do not expect the bureaucrats to recognise that) as it clearly showed how the concerns of practitioners (and politicians like George Mudie MP and other members of the TSC) about the likely affects of the RDR have become evident in the outcomes we now see. This means that a full investigation of the FCA is fundamental to the FAMR.

    The FCA has no effective democratic, legal or financial accountability and none of its functionaries have any skin in the game. It is tax raiser, law giver, police, judge, jury, executioner all rolled up in one outfit. There are no ‘separation of powers’. How can it be trusted to investigate its own failings?

    • Steven; I think, those (and I include you) who truly know what and who the regulator is, will no doubt know, the outcome of this (review) has been pre-determined, as mentioned previously in these comments, and evidenced in who, and “MORE IMPORTANTLY” who is NOT ! on the panel ! let alone who is chairing this farce !

      You also have to wonder ! why is Ms McDermott is filling top positions with Hectors old guard before the successor of her position is announced ?

      One may preempt this, as a precursor (or just covering all bases), to a major clear out if she does go, which in turn will mean, those close will leap frog into very good roles with other companies, and we all know who they will be ?

  16. Hear Hear, Steven Farrell

  17. Neil Liversidge may, I imagine, be somewhat less than completely overjoyed to learn that Linda Woodhall is from Yorkshire.

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