Under the Tory proposals outlined this week, the FSA would be abolished, with the Bank of England given the responsibility for maintaining financial stability. A new Financial Policy Committee would be set up within the Bank of England to supervise financial institutions. IFAs and mortgage brokers would be regulated by a new Consumer Protection Agency.
The Tories say the FSA’s consumer protection failures are in part due to the regulator’s emphasis on compliance rather than acting as a genuine guardian of consumer interest, a point well made.
The CPA would be open to greater scrutiny and public accountability, with regular performance assessment’s by the National Audit Office. Such a move would be very welcome and is something this newspaper has repeatedly called for.
The Conservatives have so far carefully avoided most of the debate over the RDR, offering bland statements about supporting increased professionalism and consumer access, but now they are positioning themselves as a Government-in-waiting we need to know more about their intentions for the IFA sector.
This week’s White Paper spends a great deal of time talking about increased market competition and it is on this point that the Tories should be focusing with regard to the RDR.
There are many positives from the RDR in its current guise, such as increased professionalism and a clear separation between independent advice and other forms of advice. But there is also concern among many practitioners that the proposals could limit the advice options of consumers and lead to a decrease in the number of people getting quality advice.
Grand statements about scrapping the FSA make for great headlines and will go down well with many in the industry who feel aggrieved about the way they have been treated by the regulator. But we need to be sure its replacement is not simply more of the same. The Conservative brains drawing up plans for the CPA must appreciate the huge benefit to consumers of a thriving independent advice sector and the dangers of any proposals that would damage it. It is time for the Tories to debate the RDR.