If a company over-charges its customers to the tune of nearly £120m you would expect some pretty serious repercussions from the regulator.
When Standard Life hit pension costumers in a supposedly safe pension investment with a £100m downward revaluation in 2009, the firm quickly repaid the money following a media outcry. This did not prevent a £2.45m fine.
In deciding to set up its first consumer redress scheme in response to the Arch cru debacle, the FSA suggested advisers would have to repay clients £110m, with a third of advisers who sold the funds expected to go bust as a result.
Yet, last week’s revelations in Money Marketing that an “anomaly” had caused the fee-block which contains the majority of financial advisers, alongside other brokers and dealers who do not handle client money, to be overcharged by £118m over five years is unlikely to trigger a similar adviser redress scheme.
There have been plenty of positive noises coming out of the regulator in recent months. For example, its decision to delay new capital adequacy requirements for advisers and undertake a review of the proposals and its admission that costly disclosure rules have failed advisers and consumers.
It’s acknowledgement of the anomaly and resulting fee block reform is also a positive move.
However, the regulator should look to make further cuts to adviser bills over the next few years to take account of the extra costs already paid.
Cost of living election dangers
The cost of living will be the main battleground at the next general election and we are already seeing worrying signs of how politicians are looking to use personal finance to arm themselves with cheap ammunition.
Prime Minister David Cameron’s outrageous claims that Help 2 Buy 2 was saving borrowers £2,500 a year, conveniently compared to 2007 mortgage rates, shows how MPs will look to shoe-horn such a narrative into every policy they can, without letting the facts get in the way.
The Government’s pension charge cap proposal, after the Office of Fair Trading dismissed such a move and with competition driving down charges, look suspiciously like another example of this trend. Policymaking should be driven by the best interests of the consumer, not by politicians eager for another pre-election sound-bite.