The 1986 Financial Services Act introduced a regime of investor protection the like that had never been seen before. It brought peace of mind to every UK investor that they would never again have to worry about being mislead,misadvised or missold an investment as the industry would be cleansed of all its undesirables and allowed to prosper.
Isn't it ironic then that here we are some 15 or so years later, after regulating the industry into submission and at a cost running into hundreds of billions of pounds, that we have PI underwriters scared to death of the market, life offices going to the wall, IFAs going to the wall or trading illegally (with thousands more on the way over the coming 12 months) and yet the only area that appears to have prospered out of all this has been the FSA and those in the compliance industry who carry the FSA message to those that are left.
However, in all of this, we have ignored one very important point and the most ironic point of all, which is that, as we are witnessing the ongoing collapse of the stockmarket values and sit on the precipice of insolvent life offices, what has happened to the UK investor's savings and what is going to happen in the coming months and weeks?
Is the situation really any better now than it was before the obscene cost of regulation?
After all the regulation can we really hold our hands on our hearts and say that the UK consumer is better off, Can we honestly say that regulations and of most importance the obscene cost of regulation has made the investment market a safer and securer place for them.
Perhaps the obscene cost of regulation should now be brought into question as to whether the ultimate objective of providing a safe and secure investment environment has actually worked or whether these costs have contributed to the potential demise of a once magnificent industry.
Principal, Kingswood Mortgage & Investment Services