I have been expecting the last two declarations from the FCA since January. It dropped the banking culture review on instructions from on high. Banks are now off limits.
This leaves the regulator with a brace of issues. First, what does it do with the banking review team? And, secondly, how does it continue to justify the £600m empire when its biggest source of malfeasance is off limits?
In January the FCA sought the line of least resistance. Advisers do not have big lobbying friends and 95 per cent of directly authorised firms are not in a trade association. They are ripe to be demonised.
This sector has a £9bn turnover but refuses to pay even £5m to protect itself. A football team that claims not to be able to afford a goalkeeper. It is a joke.
Adviser charging is the obvious sequitur to RDR. If you can control how the client pays for advice, you can control how much. A regulatory regime that seeks to interfere in every detail will see this as a win; as will the ambulance chasers who will follow it.
The second declaration is on the dual issue of professional indemnity and Financial Service Compensation Scheme costs. Here, the regime is thwarted in its desires. The Financial Ombudsman Services wants to be the consumer’s fairy godmother, doling out claims outside the civil law. PI insurers want it to stick to the legal claims only. The FSCS realises it cannot continue to demand increasing funding from “innocent” advisers, so its answer is to combine its charges with PI’s.
Nonsense. One PI provider creates a monopoly market. “Risky” advisers will disappear and the survivors will pick up the bill for both higher levels of FOS and FSCS claims and higher PI charges.
Higher charges and decreasing income? The perfect storm.
Garry Heath is director general at Libertatem