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FSA could be our ally

I feel sorry for the FSA. Now, I never thought that these words would pass my lips but, let’s face it, they have suffered an extensive kicking for some time. It started with the Northern Rock debacle and has carried on unabated ever since.

George Osborne’s announcement that the Conservatives would replace them with a Consumer Protection Agency has been greeted with glee in some quarters but the reality may be that an even less friendly body will spiral from the ashes.

The FSA has made a number of problems for itself and will find it difficult to extract much sympathy from the adviser population. Having laboured under the Financial Intermediaries, Managers and Brokers Regulatory Association, the Personal Investment Authority and now the FSA, it is apparent that there is an “us and them” relationship that causes many advisers feel both oppressed and ignored.

From an adviser’s perspective, it may be that the grass is not greener and that the mooted CPA turns into a prescriptive body that infringes advisers human rights in an even less savoury manner.

This reality was brought home to me recently when I spent an hour with Mark Hoban at his Westminster office. I had requested the meeting to gauge his views on the retail distribution review and to explain to him why the proposed changes would not bring about the financial nirvana being sought.

It became clear that while Hoban does not consider the RDR to be within his portfolio – he maintains that the regulator is completely independent of Parliament – he actually has little sympathy for the plight of commission-based advisers and their clients. When I commented on the well publicised predatory sales techniques perfected by the banks he retorted that his mother had received excellent advice from her bank for the past 10 years. The parameters are clear, expect little sympathy from the Conservatives while Mr Hoban maintains his current viewpoint.

George Osborne has contrived a committee (don’t politicians love these gatherings?) to examine how best to demolish the FSA and replace it with a new body. Three of the members were previously at the FSA so there are cannibalistic overtones which may result in surprising outcomes.

The FSA is now fighting for its existence and the question advisers need to answer is “should we be fighting with them or against them?” Fighting for them might seem like turkeys voting for Christmas but my feeling is that they are an organisation in turmoil and perhaps this represents an opportunity to build bridges rather than hack at the foundations.

Adviser Alliance is committed to a just and balanced regulatory framework and it might be that both regulator and regulated can work together if their interests are aligned. This is not a conciliatory shift because, believe me, I take no pleasure in castigating a regulator for short-sightedness or obstinacy. Advisers should be working with regulators to resolve conflicts and increase the respect level in an industry notorious for self-immolation.

The shame is that it is the FSA that erected these barriers in the first place – barriers that are proving to be unproductive now that the Conservatives have served notice.

Maybe, if Hector Sants reads this column, he will feel inclined towards a more affable approach towards advisers and their regulatory plight. Sadly, I will not be holding my breath.

Alan Lakey is a partner at Highclere Financial Services


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. The FSA need to start grasping the nettle and speaking to advisers willing to discuss issues with them rather than threatening them. My offer to discuss my intended new Client Agreement and Terms of Business with Linda Woodal at the FSA remains open. Much of the document encompassed the best we could find from other firms CATOBs on the web as well as issues around the proposals in the June RDR paper about the new IDD replacement for 2012 and in drafting that at the same time, it became apparant that their proposed document was just too long to be referred to as “Key Facts” and a lot had to be moved in to the CATOB to risk loosing client engagement.
    If she would rather send her team round for enforcement instead of talking, that is entirely her decision, but it will stiffle innovation whatever she says and will mean that we will all have the expense of a new consumer protetion agency, when reform rather than rebuilding could have been a less expensive option..

  2. If we hadnm’t been insulting the regulators, and the politicians for that matter, would the relationship have been any better today?

    Some said yes so I thought we might give peace a chance, is it working?

    Others say no so they now preach what I have done for years.

    The missing link is: Understanding, whether it be the RDR or why the banks fell into one of the regulatory gaps there is a lack of understanding which the vested interests feed upon, there is an imbalance of power between the banks, the providers and the likes of the PFS on the one hand and those of you at the coal face on the other. The FSA has an opportunity it should grasp with both hands.

    Is it all about power?

  3. We, the advisers try to work with the regulators, its the FSA that dosn’t want to play!!

    Alan – Don’t get your head turned by one meeting with these guys, you are our last hope.

  4. I find it very difficult to have any sympathy with the FSA, except as far as its failure to regulate the banks is concerned because that, it seems, is because, according to Adair Turner, it was instructed by the Treasury to look the other way. But what, since the credit bubble burst, has the FSA done any differently in terms of how it regulates the banks? Other than making a few grand noises about requiring that they must shore up their capital reserves against future insolvency risks, precious little, if anything. Meanwhile, the gas burners under the IFA community seem to have been given another clockwise turn, despite well over a million complaints against the banks during the past 6 months and barely 0.85% o that figure against the IFA sector. So what happened to the FSA’s proclamations about proportionate regulation, echoed I might add by Dan Waters?

    That having said, I agree with Alan’s fears that a new CPA staffed by much the same people as the FSA could be even more pernicously biased against the IFA sector and no less profligate with the vast sums of monies it extorts from the industry every year.

    I would prefer to see root and branch reform of what we already have (no more golden parachutes for the likes of Clive Briault, £25 a head for the Christmas bash, no more costly original works of art adorning the walls of Canary Wharf, three quarters of the FSA’s staff relocated to a provincial site, no more unearned bonuses, drastically pruned expense accounts ~ and those would be the things just for starters, even before we get to how the FSA actually justifies its very existence.

    Sorry ~ it’s Friday afternoon and I’m just indulging in a little pre-weekend daydream.

  5. We, the advisers try to work with the regulators, its the FSA that dosn’t want to play!!

    Alan – Don’t get your head turned by one meeting with these guys, you are our last hope.

  6. The Mystery Shopper for IFAs 3rd November 2009 at 4:43 pm

    Last nights programme on ‘who gets paid more than the PM’ made a laughing stock of Hector Sants with a picture of him with a silly hat on earning about 600k last year for failures. Ha bloody Ha! But in reality he is still having the last laugh because his stupid salary.

    Alan Lakey is not fooled by the FSA, he’s being diplomatic and trying to see if we can get them to listen whilst their jobs are on the chopping block.

    In my view the sooner they sack the lot and stop wasting my time and money pretending they are actually doing something useful the better. Roll on elections and don’t vote Labour or Conservative for that matter as the Tories have also reneged on a referendum and with a man like Mark Hoban in charge of the Tory policy regarding the FSA plight we have no chance.

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