Are the FCA’s priorities the right ones?

The FCA is back with a bang, having welcomed advisers back from the Easter break with no less than four major publications setting out its priorities and areas of focus for the next financial year.

The regulator, quite rightly, continues to focus on transparency of retail investments. It has used its “mission” document to keep up its end of the transparency bargain, pledging to give firms and consumers “greater clarity about how the FCA prioritises its interventions in financial markets”. Just how clear and transparent it is to expect advisers to wade through almost 300 pages of regulatory documents in one go is a question for another day.

There are reviews aplenty, including investigations into platform competition, whether the non-advised drawdown market is working well for consumers, and the extent of unsuitable advice recommending high-risk products. These are all to be welcomed, despite cries of “too little too late” on the latter in particular.

There are also topics that are noticeable by omission, with Brexit barely getting a passing mention despite the regulator setting aside £2.5m to manage the UK’s exit from the EU. Perhaps this is given the ongoing uncertainty about how Brexit talks will pan out.

Though it did not make the cut in terms of published priorities, Money Marketing understands managing the regulatory fallout from Brexit is right up there in terms of major challenges for FCA chief executive Andrew Bailey, alongside tackling the long-term savings gap.

Others were also surprised with the lack of column inches given over to defined benefit transfers, given the momentum we are seeing in the market and the noises the FCA itself has been making. If not for this year, this is definitely one to watch for the future.

What has gained a lot of airtime is advice suitability, and whether advice charges are being appropriately explained. It seems a shame that this has been highlighted as a specific focus for the regulator, particularly when the advice profession is still waiting for formal guidance and best practice on the outcomes from its suitability review.

Perhaps more important to advisers in the short-term is not the high level stuff, but the impact all of this has on both advisers’ pockets and their bottom line. The FCA has touted the increase in its budget to £526.9m as “aligned with inflation”, though unfortunately advisers will see their contribution increase by an inflation-busting 4.7 per cent to £77.1m.

While no one wants to argue against fairer charges, advisers should at the very least be able to expect the FCA to deliver the same.