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