The results of our latest survey of personal finance professionals across the UK, released last month, revealed increased concern regarding the impact of regulatory costs.
For the fifth year in a row, regulation and compliance costs have been identified as a key threat to business success, restricting access to advice and adding complexity for consumers.
Despite the Financial Advice Market Review acknowledging the negative impact of regulatory costs must be addressed, the trend is worsening.
Seventy-five per cent of advisers now consider such costs as one of the biggest threats to their business, up from 72 per cent in 2015 and 67 per cent in 2014.
The message to regulators is clear: the opportunity to introduce regulatory balance cannot be missed. Top of the list is the current review into Financial Services Compensation Scheme funding. While we were pleased with many elements contained within the FCA’s consultation paper, we were disappointed a product levy was ruled out without at least investigating the merits. Perhaps the recent increase in insurance premium tax is considered enough.
The FCA said a product levy would fail to overcome the challenges associated with a system that requires pre-funding. True – but set at the right level it could fund financial education and other initiatives as well as consumer protection.
We are pleased the FCA is committed to shifting the burden of the FSCS to higher-risk segments of our sector but we urge it to broaden its thinking for a long-term solution rather than tinker with an outdated one.
Keith Richards is chief executive of the Personal Finance Society