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Mick McAteer: Legacy business models could make industry unsustainable

The Financial Inclusion Centre director Mick McAteer

The Financial Inclusion Centre director Mick McAteer says the financial services industry risks becoming unsustainable as providers grapple with the huge challenge of unwinding their legacy business models.

McAteer, who is also a non-executive board member of the Financial Conduct Authority, believes a series of “toxic events are reshaping the financial service sector and making it incredibly difficult for the industry to become sustainable”.

Speaking at the Lansons Communications Future of Financial Services conference in London today, McAteer said one of the big themes changing financial services is the level of household indebtedness, combined with economic uncertainty and job insecurity that has not existed to the same extent in previous financial crises.

He said another factor reshaping the industry is how providers deal with inherited, old-style business models.

McAteer said: “The biggest challenge facing the industry, particularly among the more established players, is there is a real problem with legacy business models.

“Just as households have this legacy problem with debt, I think many of the big established industry players are going to struggle with unwinding legacy business models in order to be able to compete in the market.

“That is going to really hinder the ability of those firms to spawn, to become more efficient and to provide value for money products for consumers.”



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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Mr McAteer is almost there.
    What he does not seem to have realised is that overall the Government and the Regulator do not want the less well-off to invest in anything except perhaps an Auto Enrolment Pension. These people anyway (as Mr McAteer has pointed out) have debt problems and it far better to pay off debt than to buy some rubbish product from a bank. The Government would prefer that they went shopping and got deeper into debt. That leaves precious little room for investing or saving. That’s why so many of the banks are withdrawing from advice. (Apart from the fact that they can no longer make squillions in commission). The Regulator and Government would have an easier life if this sector of the community only saved in cash accounts (if they saved at all). This would make regulation so much easier and probably lessen the load of the FOS and the FSCS as a result.

  2. Stephen Rowland 17th April 2013 at 4:53 pm

    This is what the FSA & Inland Revenue have wanted all along!

    The trail commission streams ‘shut off’ & clients / advisers paying as much tax as possible!

    Unfortunately all the ‘do gooders’have fallen for it & now the whole industry that lay the golden egg will be potentially destroyed !

    Still – the Government will have to pick up the tab in unemployment benefits for all those ‘wicked’ financial advisers!

  3. Sorry – not completely sure whar Mick is referring to when he talks about ‘unwinding legacy business models’. He can’t just mean trail, surely.

  4. Investments shouldn’t be for the rif raf. Was that the plan?
    investments are now for the debt free only?
    When you watch the telly, the only thing discussed is Which Cash ISA. Investments for the masses has ceased to exist as a TV subject.
    The trouble is we Financial Advisers are dinosaurs, we are heavily geared with huge 1% tracker mortgages and we’re
    investing the savings. Or is that just me?

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