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FCA issues call for evidence on retrospective regulation

The FCA has asked firms to send it examples of instances when they believe the regulator has applied its rules retrospectively.

In its latest regulation round-up newsletter, published today, the FCA says this is part of its work aimed at closing the “expectations gap” between regulators and the industry.

Last year, the FCA investigated the extent to which there is a difference between its expectations of firms and firms’ understanding of what is required of them.

It looked at whether this meant that firms are shying away from providing products or services that would be beneficial for customers for fear of falling foul of the rules.

As a result, last month the regulator published a consultation paper which aimed to clarify the boundaries between full advice, simplified advice and non-advised services.

The regulator says: “We remain interested to hear from firms about times when they believe the FCA (or the FSA) applied its rules retrospectively. That is, applied a more demanding standard or interpretation of the rules after the event with the benefit of hindsight.

“The examples you give us will be used to feed into our continuing work, and our approach to communicating with the industry.”

The FCA asks firms to submit the examples through its website and to be as specific as possible.

The FCA is also encouraging firms to work with the regulator as part of Project Innovate, through which it aims to work with firms as they develop new technologies.

To submit examples of retrospective action click here.


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There are 16 comments at the moment, we would love to hear your opinion too.

  1. Incompetent Regulators 21st August 2014 at 3:11 pm

    Note quite retrospective legislation but just as bad, mis-regulations. Rules for the sake of rules.

    Perfect example is where the pension review forced companies to pay compensation to clients who transferred from Final Salary schemes by way of a cash equivalent transfer value, then received compensation payments via pensions review as they were deemed to have been mis-sold. Then finally many of those final salary schemes which they had moved away from went into default! The advisers in this instance saved the clients pension pots when in fact they may have ended up with nothing and all. Remember those queuing up naked outside the houses of parliament? Advisers were penalised when in fact they had done a good job..

    So can we now have some compensation paid back from the regulatory staff who made the decisions on this review?

  2. Incompetent Regulators 21st August 2014 at 3:12 pm

    Another one is SI2326. Read the treasury web site and the FOS ignores this as well. This is definitely retrospective!

  3. Nick Pilkington 21st August 2014 at 3:14 pm

    More to the point would be to include the FOS in this response as they are the main perpetrator of applying rules retrospectively & the greatest deterrent to developing new products or recommending any product which is not relatively low risk & mainstream regardless of the clients circumstances.

  4. Retrospective ? I legally entered into contracts with many clients whereby I was to be paid zero Initial commission and 0.5% pa trail commission. Trail was agreed in lieu of initial with no promise of further advice. FSA/FSA retrospective regulation means that hundreds of thousands of pounds will be stolen from me.

    I could go on and give further examples where clients have lost out as a result of retrospective regulation but quite frankly I’m no longer interested in helping those who can not be trusted to honour a commercial contract.

  5. How can anybody suggest that its plausible that they are not aware of when they apply rules retrospectively?

  6. Surely it would be simpler to specify what is expected of advisers and then feed that into FOS and make this a level playing field so no benefits of hindsight. Past examples are irrelevant to the present. For example; Simplified advice is a great idea but the risks to small IFAs like ourselves are too great for us to take that kind of risk. Network, PI and regulatory costs already account for 15% of our turnover.

    End result; less advisers working in this area = less competition = less innovation = poor consumer outcomes – all because the rules were not clear in the first place. The FCA don’t need examples of past injustice just clarity going forward that will stand the test of hindsight.

  7. They want evidence of retrospective regulation. How much time have they got?

    There’s oodles of it.

    Wasn’t Key data retrospective?

    Wasn’t Arch retrospective?
    Wasn’t the Pension Transfer debacle retrospective?

    The Endowment scandal?

    Even (dare one say) PPI?

    Anything that is older than 3 or four years could be fairly labelled retrospective – or is that a gross misrepresentation? It seems that our current regulation is nothing BUT retrospective. They spend so much time looking in the rear view mirror that they don’t notice the crash in front of them.

    If they want to avid retrospection they had better start looking at the new pension provisions for cash withdrawal, AE and Equity Release for starters. There are more potential blow ups in front of them than in an Expendables movie.

    Regulatory oversight is not good enough and the implementation of rules far too slow. We had the MMR come into effect this April as a result of the 2008 farrago. That is far too long a gestation period.

    (You can breed a baby in 9 months!)

  8. I don’t think the FCA is particularly guilty of applying rules retrospectively, it’s the FOS that is the main offender for retrospective decision making.

  9. I have a mortgage broker friend who asked the PIA how long he should keep client insurance/endowment files for as he was deregistering from the investment side of things and received a written response that they only needed to be kept for 6 years. Then the endowment scandal broke and the dear old FSA told him the letter was worthless and that if he could not prove the he had made fully compliant sales he was in default. That always seemed a bit retrospective to me.

  10. E L Wisty (an only twin) 21st August 2014 at 5:31 pm

    If it looks like a pig, grunts like a pig and makes a nice breakfast, then it’s a pig – no matter how much make-up you apply.

    This smacks of the FCA wanting to appear humble and open to consultation, despite the appalling past behaviour – as listed above.

    If the FCA wants us to believe that it is now on the side of the angels, then Wheatley must announce a full independent investigation into the CF Arch cru debacle. Once and for all, we need to know whether this was corruption, incompetence or both. Furthermore, heads need to roll and compensation must be paid to those firms that were set up as fall guys for the FCA and Capita.

  11. Michael Winfield 21st August 2014 at 9:43 pm

    The FCA, know all the retro’s, but it is interesting how much Members remember.

    Financial Services Regulators see Member as their cash cow. While the Legal Services Regulated by its own Trade Union and the Doggy Service,protect the mafia/masonic brotherhood. While applying total
    reject of public interest.

    Legal Ombudsman Claims form question 5, applies a longstop (Illegal)
    Compare statistically claims results between the FOS and the LOS. this comment equally applies to
    the Compensation Fund.

    Solicitors can structure their businesses as Limited Liability Partnerships. Not available to IFA’s

  12. Perhaps APFA might care to lead the charge on this one. If it’s got the bottle.

    Then again, given that the FSA/FCA enjoys a self-granted open mandate to reinterpret by today’s standards its rules/guidance of yesteryear, it’ll be equally free to interpret in whatever manner it fancies all and any submissions it receives on its widely acknowledged practice of regulation by hindsight. And no external independent body exists to make it do otherwise. So what’s likely to change?

  13. Its hard to pin point any rules in isolation, however on saying that as some have pointed out above Stephen, Harry, Greg.

    They are retrospective when it “SUITS” them !! no rules they just move the goal posts

  14. Contractually anon 22nd August 2014 at 8:53 am

    Six years would probably be right, but it’s when you count the six years from. Six years from the point of loss would mean that you are covered under the Statute of Limitations.

  15. Retrospective regulation is a misnomer. Has the regulator ever changed or created new rules to use against past issues? No.

    The way FSMA has been created – on a principle based regulatory system – should consumer detriment ever occur, the principles will always cover their corner. This isn’t necessarily wrong either, but from one side of the fence this may appear unfair. The phrase ‘ a customer is always right’ is never more prevalent than in a highly regulated environment.

  16. Mathew – you make a good point.

    However the problem I am seeing again and again is the lack of innovation in products and services. The only area that has seen growth is the non-adviser / execution only services or marketing companies cold calling but not giving advice (yeah right!) – which is telling in itself.

    In other words if there is a way a person can opt out and circumnavigate the FCA rules or FSCS then we will have innovation. I have a bucket load of ideas which could and would help clients but when I look at the return on my investment in the FS industry it is not worth the risks. Regulation (in the name of consumer protection) has not slowed innovation it has stopped it .

    I like many others feel this is a PR stunt by the FCA to make them look like they are listening. However harsh and bitter experience tells another story. Better to be safe than sorry. Its good business practice.

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