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Apfa: FCA was right to back down over Mifid II

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The FCA recently published its mission statement and business plan setting out what it is going to do over the next year. I am often asked what I think of these plans. My answer is that it depends on how the regulator lives up to its professed intentions. In other words, what it does is more important than what it says it will do.

In looking at what the FCA does, I would like to congratulate it on listening to advisers in its decision to not extend the telephone recording requirement under Mifid II to article 3 exempt firms.

We worked hard with members and representatives on the FCA practitioner panels to explain the impact on advice firms, particularly smaller businesses. The FCA listened and reconsidered.

I think the conclusion it reached is the correct one. A record of what is said between adviser and client is important but how the record is made should be proportionate and flexible. It is a decision to be made at the firm level.

It made no sense to make a recording of a telephone conversation but a note of a face to face meeting. With developing technology, recording may become more prevalent over time, but it would have had a significant impact if forced on the advice profession at this stage.

This shows the FCA is willing to listen and consider the facts. It also demonstrates the value of coordinated engagement and presenting an argument supported with evidence. It remains as important as ever for the adviser community to speak with one voice. Our work with our members on this just goes to show what gains can be made.

The real value of the FCA’s words and intentions will be in the demonstration of proportionate regulation for firms large and small over the coming year. The proof of the pudding is in the eating.

Chris Hannant is director general at Apfa

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