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Martin Wheatley: One year of the FCA


The year since the Financial Conduct Authority came into existence has been a busy one. In that time, we have looked to reshape the regulatory relationship with industry by focusing on a new way of engaging, acknowledging where we can provide clarity around our expectations, and having honest conversations when we see behaviours or practices that do not meet these expectations.

This change has been driven by the need to place consumers at the heart of the way we work – both firms and the regulator alike. I do not subscribe to the view that the regulator and the industry must be locked in perpetual conflict. It’s simple: for us to be effective, we need to work with industry to help deliver what consumers need and should expect.

With such a strong consumer focus, in the first 12 months this has inevitably meant particular attention on the advisory market. And, as our recent business plan makes clear, that attention will remain as the industry adapts to the RDR.

Our work in the advisory market is an interesting example because it is an area where we have reached out to industry, listened when we have not been clear, and changed our approach to provide further clarity. It is also an area where we have needed to provide some firms with honest feedback.         

Targeted interventions

For example, the recent thematic work on how firms are using the independent label showed that most appeared to be getting it right. We did, however, recognise from speaking to industry that there remained some who were unsure of what the rules meant for them.
With this feedback we provided some targeted interventions to ensure that our expectations were clear.

All of this work has been underpinned by a better conversation with industry – directly with firms and with representative trade bodies. Our ability to explain to those working in the market what our expectations are is dependent on us having a strong working relationship with those we regulate. 

In the first 12 months we have, I believe, made great strides in this area but I know there is more to do and we will continue to engage, listen and adapt our approach if needed.

There are times when we have been clear and, to some extent, industry has not engaged. The recent thematic review into disclosure is one of these instances.

Almost three-quarters of firms were found to have not been sufficiently clear when describing their charges to clients. 

This was despite almost a year passing since the RDR came into place, what we believe to be the straightforward nature of the rules themselves, and the support we’ve offered firms.

We are working hard to make ourselves available and to be clear, so the intention of our regulation is understood by all. That is vital not just for you but also for the millions of consumers you serve. For that to work, however, firms also need to listen, adapt and meet the new requirements.

Achieving a collaborative approach to regulation is important if we are to place consumers at the heart of the way we all work. 

We know this can be achieved through a better engagement model, with each side actively listening to the other.

Collaborative approach

Naturally we won’t always agree, but the advisory market is an example of how a collaborative approach works. It has shown that together, the regulator and industry can make improvements. 

After setting out our stall in the first year, the next 12 months will be crucial to us working together and making these changes.

Martin Wheatley is chief executive of the Financial Conduct Authority 


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Simon Webster 2nd May 2014 at 3:32 pm

    Sounds great in theory Martin but it’s not how it has worked in practice is it?

    Look at unbundling – there was a choice between the imposition of a bewilderingly complex and hugely expensive new charging regime – clean/ super clean/ slightly muggy or simply mandate one share class and allow platforms to compete on the level of rebate paid to clients. One was clear, fair and not misleading (and relatively inexpensive) and the other – the one selected – was anything but… and the costs keep mounting. As to some sort of better consumer outcome – there wasn’t one ’cause in many cases charges actually went up – pretty much exactly as when adviser charge was introduced.

    So next time you get a choice between a complex and expensive solution and one that isn’t – PLEASE for once do the latter!

  2. Malcolm Coury 2nd May 2014 at 3:41 pm

    Martin, thank you. It’s quite obvious you have very good intensions for the future of our sector. However, I quesion the continued “industry” label when referring to the advisory profession. I doubt it’s missed your attention that advisers now have Statements of Professional Standing (at least those who advise do) to demonstrate they have put i the hard yards to achieve the required standards and qualifications. Therefore, my challenge to you is to start treating advisers, particularly independent advisers, as professionals rather than product distributors, which by definition implies product salesmen. I think it’s about time that the regulator supported by government considered moving the regulation of the independent advisory sector to the professional bodies and the FCA concentrated on the product distributors, i.e. tied adviser (aka restricted advisers), insurance, banking and investment product manufacturers. I appreciate this is something that would take a lot of planning but I believe in the long-run it would be good for not only the independent advisory sector itself, but for the customers we serve to finally be treated as a profession and, therefore, act like one.

  3. Surely the fact that 73% of those tested ‘failed’ the new charges disclosure review suggests that the FCA’s belief that the ‘straightforward nature of the rules themselves, and the support we’ve offered firms’ was clearly quite the opposite!

    What is more disappointing was that someone at the FCA thought that the best way to ‘straighten out’ the industry in this respect was to go to the press with sensationalist headlines, defeating one of the main purposes of the FCA, i.e. to promote trust by the public in financial advice.

    Surely, for failure on such a large scale to have occured within a group of professionals and firms who have been bending over backwards these last 6 or 7 years; to meet the requirements of practising professionally in this industry, a little reflection between the FCA, IFA firms and representative bodies (‘behind closed doors’) may well have been more productive?

    I truly believe this was a genuine opportunity lost for the FCA and advisers, both IFA & Restricted, to get this right once and for all in a trusting and positive way. To place all of the blame at the feet of the advisers and their firms by the FCA smacks of the ‘FSA’ and a denial that there could be some culpability on both sides of the house!

    Had there been a failure rate of less than say 20-30%, I think we would all agree that the FCA had done a good job of communicating its requrements but the fact the % is so high, suggests a failure on both sides.

    Lots to work on and the sooner advisers and the regulator start singing rom the same sheet the better for all, especially clients. Bashing each other over the head day after day is completely unhelpful and will never work!

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