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Apfa: Financial regulation is in need of reform


There are three crucial questions that will determine the effect of Brexit on advisers.

Firstly, to what extent will the UK seek to apply the single market? Our surveys have found one in three advisers have at least one client outside the UK in the EU.

In the event advisers must have a local licence and abide by local rules I expect many would struggle.

And while many currently advise their clients only when they are back in the UK, this could also become cumbersome in future.

If we do not seek to apply single market rules, to what extent will the FCA reform UK regulation? Under the FCA’s “sustainable regulation” initiative, it is committed to reviewing whether any of its rules are outdated and, if so, to removing or redrafting them.

A policy of “copy out” from EU directives leaves much of the Handbook vague and unclear: the underlying directives were never supposed to be actual legislation.

It was the responsibility of member states to clarify and articulate the intention in a way that meets their needs – an opportunity the UK largely chose to ignore for fear of being accused of gold plating. So there is ample scope for better regulation even without deregulation.

Finally, will the Government direct the FCA to develop a new style of financial services regulation? The Government will be in no great rush to redesign the regulatory framework with all the other things on its plate right now but the medium-term is more open.

We are looking to submit areas of difficulty and uncertainty to be examined as part of the sustainable regulation agenda but it is also time to be thinking more radically about further off when there may be greater scope to refashion a future regulatory framework.

Chris Hannant is director general at Apfa



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. “Our surveys have found one in three advisers have at least one client outside the UK in the EU…In the event advisers must have a local licence and abide by local rules I expect many would struggle” This is a misunderstanding.

    The supposed requirement for a services passport only arises to the extent that the UK implements EU law requiring one. There is no such issue in dealing with (say) Australian clients. Of course, if one actively markets into any overseas jurisdiction, one needs to have some form of local license (or passport in lieu). If however the client is on an IFA’s books from prior to moving o/s, or indeed because the client approached the IFA, there does not need to be an issue here. The same applies to (say) a London corporate finance business or Investment Bank approached by a German Company seeking a London listing. In both cases, the services are ordinarily provided in the UK.

    The UK implementing EU/Single Market rules are what create the supposed need for a ‘passport’: in these cases, its the problem, not merely a bureaucratic solution to its own problem.

  2. Since when did the regulator take any (genuine) notice of anything APFA has to say about anything?

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