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FCA advisers point to ‘regulatory overload’

Business-Finance-Corporate-General-Paperwork-700.jpgThe panels that advise the FCA have told it that ‘regulatory overload’ is an issue for firms.

The regulator has four expert panels that advise the FCA on issues affecting groups including small businesses, markets and consumers.

Responding to the annual reports of the panels today, the FCA noted that “regulatory overload” was identified as a key theme across the panels.

The panel that represents smaller businesses, which was formerly chaired by IFA Association director Clinton Askew, said that firms were receiving too many data requests, and that the FCA should conduct a more rigorous cost benefit analysis before it launches significant work.

The FCA says: “We recognise that the volume of regulatory change can put pressure on firms’ resources. We have a thorough Business Planning process which prioritises our work according to where we can have the most impact. We publish these priorities in our annual Business Plan. Our Mission also provides further detail on how we focus our resources to reduce harm, advance our objectives and deliver the greatest public value.

“As we have moved to a more sector-based approach to our work, we now have better oversight of all individual projects covering each sector. So we will try to ensure that, as far as possible within our remit, we can reduce the cumulative impact of our regulatory requirements on firms.”

The FCA listed financial advice as one of its key work streams in response to its advisers, saying that it was progressing the recommendations of the Financial Advice Market Review.

The FCA’s consumer panel urged the FCA to continue to monitor the robo-advice market for risks.

The regulator says: “When we are aware that firms are not complying with our rules on advice, we will take relevant supervisory action.”



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There are 3 comments at the moment, we would love to hear your opinion too.

  1. I think you will find the industry has been saying this for years.

    Regulatory overload comes in two forms, administrative and Financial.

    Harry Katz made comment on a article the other day about micro management, we all suffer this at the hands of the FCA, couple this with the spiraling costs/levies and the net result is very high cost for the end user (the client) zero competition, zero innovation, zero new entrants, and a industry so bogged down it neither runs smooth or forward.

    All the senior staff at the FCA do, is play the blame game…. Mr Bailey saying low interest rates are the problem…. Ms Woodall saying the industry needs to bring new products to the market for the older clients, R Percival’s clone on about suitability reports you could go on and on and on but its easy to blame/criticize everyone else for your own failures when you have no accountability and open ended budgets….

  2. A more rigorous Cost:Benefits analysis? More rigorous than what? Since when did the FCA ever undertake a Cost:Benefits Analysis on anything?

    Having not undertaken (or even commissioned) one for the biggest upheaval of all, namely the RDR, it sure as sherbert ain’t gonna start doing them now, is it?

    As for “a thorough Business Planning process which prioritises our work according to where we can have the most impact” ~ oh yeah? Like stemming the tsunami of PPI mis-selling or the mountains of uninsured liabilities in respect of UCIS mis-selling which continue to be dumped on the rest of us by way of the FSCS?

    “As we have moved to a more sector-based approach to our work, we now have better oversight of all individual projects covering each sector. So we will try to ensure that, as far as possible within our remit, we can reduce the cumulative impact of our regulatory requirements on firms.” The only thing the FCA ever moves is the goalposts. I’ve never read such a load of sanctimonious hogwash in all my life.

  3. n the world of financial services regulatory compliance “describes the goal that organisations aspire to achieve in their efforts to ensure that they are aware of and take steps to comply with relevant laws, policies, and regulations.”

    The rules are well defined, as we all know, in the FCA handbook. For the avoidance of any doubt, the regulator has even provided an introductory guide.

    Regulated firms must follow FCA rules. The rules it would seem are clear (to the author/s) but the interpretation and purpose of them at times makes little sense.

    A book, published in 2016 by the City University of London called the ‘Stupidity Paradox’ investigated common sense in decision-making.

    Professor André Spicer’s research included input from management consultancies, banks, engineering firms, pharmaceutical companies, universities and schools.

    The ‘outcomes’ of investigations into the ‘Stupidity Paradox’ revealed many examples of when common sense decisions are simply ignored.

    Examples included:

    “Executives who more interested in impressive power point shows than systematic analysis.
    Companies ran leadership development initiatives which would not be out of place in a new age commune.
    Technology firms that were more interested in keeping a positive tone than addressing real problems.
    Marketing executives who were obsessed with branding when all that counted was the price.
    Corporations that would throw millions into ‘change exercises’ and then, when they failed, do exactly the same thing again and again
    I just love the last one.

    Professor Spicer’s concludes by asking, “Why could such organisations, employing so many people with high IQs and impressive qualifications do so many stupid things”.

    I am reminded of the definition of a camel. It being a horse designed by committee.

    I have worked since the early 80’s in the industry thought six different regulators- NASDIM, LAUTRO, FIMBRA, PIA, FSA and FCA. The average lifespan of a regulatory body being some six years.

    With the exception of the FSA transition, rulebooks, even staffing, for the predecessor bodies have been subject to rewrite and new hire, not a roll over. The FCA transition was a re-skin.

    What does ring loud and clear is that regulators do not, in the most part, seem to learn from past mistakes. Not only are ‘learnings missing, they more often than not refuse to accept responsibility or blame for past mistakes.

    The FCA is now approaching five years old. So, in theory only another two to three years to go until yet another metamorphosis occurs. In that time it has seen three chief executives and a significant turnover of very senior staff embarking on a journey working for the firms they used to regulate.

    Regulation is an industry. The thousands of pages in the FCA manual require firms in turn to employ thousands of people with high IQs and impressive qualifications to interpret the rules and ensure that their business implements them to the letter.

    FCA research from 2015 found that 88% of large firms and 44% of small firms increased the amount of time and money they spent on compliance and the cost of regulation, according to New City Agenda is some £1.2 billion.

    But, and here is the big BUT. The finer interpretation of some rules would suggest that rather like in the Italian Highway Code, red lights are a suggestion, some rules make no sense in their implication.

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