View more on these topics

FSA needs time to reflect

As my FSA fees soar by 20%, just what the regulator done for IFAs?

Ihave received notification from my network of the regulatory fees for 2005-06 and surprise, surprise, the fees have gone up by a whopping 20 per cent on last year.

What am I getting for my fees? I looked at the FSA website and apparently it has four statutory objectives – market confidence, public awareness, consumer protection and reduction of financial crime.

It is maintaining confidence in other financial systems but it has not increased confidence in the life and pension industry. It could be argued that part of the reduced confidence is equally down to the actions over the years of financial advisers through such debacles as pension mis-selling, the FSAVC review, precipice bonds, endowment misselling. I accept this point but the FSA has a statutory duty first to sort out the advisers responsible and second, promote confidence in the advisers it sets regulations for. It has yet to start doing this second part. We IFAs are all tarred with the same brush. The public are not saving enough because of a lack of confidence in the products and the companies which provide them. The FSA’s tasks of maintaining confidence is a difficult one which it does not appear to be achieving. I get intelligent clients telling me it is not worth saving in a pension, is it?

The second principle is public awareness and promoting public under-standing of the financial system. The changes the FSA have instigated have reduced understanding. Public awareness of products and how they work does not appear to be reaching the intended audience. The FSA needs to look at what it is saying. How can you promote the use of the products you tell the public may have been missold? Too many mixed messages.

The FSA should be paying for teachers and other professionals to help make school-leavers aware of things such as pensions and protection products. It should be pushing to make knowledge of these simple products some part of the curriculum and publicise the benefits of tax relief on these products. Few clients seem to be aware of the tax benefits available in a pension plan.

On consumer protection, it seems to me the public are very aware of how to claim and who to claim against. Perhaps the FSA has concentrated too much on this area. I believe it has succeeded in providing this protection, at least in our industry, and it could be argued it has concentrated on this part of its objectives, possibly to the detriment of maintaining confidence and promoting public awareness.

The FSA has been particularly vociferous about consumer protection but when the big test came, many would argue it failed miserably. The debacle of Equitable Life was a failure, not only for the FSA but also of our industry as a whole.

On the question of the reduction of financial crime, I do not feel able to make any comment on the FSA’s achievement but it has certainly meant an increase in the paperwork that IFAs have to complete.

Overall, it is clear that the FSA is trying hard to meet these statutory objectives but I feel it must look more carefully at what it is saying and to whom. A lot of money is being spent but it is not clear whether the FSA is achieving anything more than increasing public awareness of compensation procedures.

FSA chairman, Callum McCarthy recently said: “We are determined to be more rigorous about the cost burdens that regulation imposes on firms”. This is music to the ears of everybody in the life and pensions industry but the reality is that the cost of regulation of our industry has increased. The regulatory process or the interpretation of the requirements is too costly. It has led to a lack of capitalisation in our industry and the constant changes the regulator has been imposing over the past three to four years has meant there is instability in cost and firms find it difficult to plan ahead.

We need a period of stability in which regulations which have been imposed are left in place to work. so we can see what works and what doesn’t. We need stability to recapitalise our businesses, look at the future and make plans for investment where necessary. My big fear is that the next generation of IFAs will not be trained and IFAs are definitely needed.

John Winful is a partner at Winful Associates

Recommended

Pack to the future

Our panel assess the likely impact of home information packs on distribution and discuss whether a study to find one-off cost of regulation would be helpful to the industry.

Get in Shape

Scottish Equitable Protect head of marketing Rod McKie, rather than tinkering round the edges, critical-illness products need top-to-toe toning to ensure they are fit to survive.

Park Row sets site on recruitment

Park Row has set up a recruit- ment website for advisers. The site is aimed at advisers, managers and support staff. Park Row says it was inspired by the success of its recruitment micro-site which was launched earlier this year. It will provide information to anyone interested in joining the firm, detailing opportunities and details. […]

Health - thumbnail

Fit for Work: guidance for employers published

On Friday, the Department for Work and Pensions published its guidance for employers on using the new Fit for Work (FfW) service to help ill employees return to the workplace. It also includes more details on the tax exemption for medical interventions that commenced on 1 January 2015.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com