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‘Over-regulation is putting small-cap stockbrokers out of business’

Wills & Co Financial Group founder and chief executive Peter Shakeshaft has slammed the FSA for over-regulation of the small-cap investment market and claims it is putting stockbrokers out of business.

The FSA censured Wills & Co for poor sales practices and not monitoring its advisers properly despite a fine and call to action in 2007.

Wills & Co would have been fined £1.5m if it had not been in the process of winding down its business with a large amount of customer redress due.

In an interview with Money Marketing Shakeshaft says the FSA is creating a situation where shares have to be sold in the same way as insurance products, which is putting stockbrokers out of business.

He says: “If it is, as the FSA says, that you need to sell a share like an insurance product then we have nowhere to go. There is no point in any
stockbroking firm trying to do business at any time.”

Shakeshaft says stockbrokers are also suffering from competition from firms on the continent that can sell into the UK without investor protection and have more pragmatic regulators.

He says the firm spent a significant amount of money with a top four consultancy firm to look at its procedures and was told it had not missold.

He says: “The FSA now believes it is bulletproof. They believe that good legal argument is irrelevant as they can bully or railroad any firm into
submission.”

“We stopped defending our actions because we ran out of money although we still believe we were right. There is no point in any stockbroker fighting the FSA.”

CandidMoney.com founder Justin Modray says: “Today’s smaller companies will be tomorrow’s big players so overregulation is a worry.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. The small stockbroker market has been an under regulated, if not non-regulated excuse for boiler room sales tactics for decades. These guys are just beginning to get the level of regulation they should have been subject to for decades. If that drives 95% of the to the wall it will be a major victory for consumers.

  2. How about some clear regulatory procedural guidance on how small cap stockbrokers should operate? Oh, I forgot, that’s what we’re seeing now. A shame that doing it after the event has bashed yet another firm into oblivion. Still, never mind, we’ve got to be seen to be big and tough and ruthless on consumer protection. That’s our primary charter after all. As for the banks………… oh, don’t go on about them, they can wait for another day (or decade).

  3. Anybody remember Harvard Securities? That was 80s chic. Lol

  4. Julian Stevens hit the nail on the head, when will the bank salesforces be regulated, sorry ‘supervised’, properly.

    Last week my wife was standing at the teller’s window in the ‘BIG’ bank when she was told she had X amount in her account and that she should be doing this that and the other with it, all within earshot of the people in the queue behind her, she had sold some precious items to keep us going. Last night the ‘BIG’ bank called to tell her she needed an ISA, some car insurance, life cover, household cover…this man was a salesperson yet he knew every detail of my wife’s account and all her personal information. She asked me how someone who was selling for other firms within the banking ‘group’ could have access to the bank account, can you tell me Lesley?

    As for ‘small cap stockbrokers’, or any stockbroker for that matter, are they doing something socially useful? (sorry Hector) I haven’t met any, particularly my siter-in-law’s ex boyfriend.

  5. Thanks for your comments. I think the point is that because of principal based regulation it is open to different views. We DID spend £1.5m on a top four accountancy firm and there view was different to FSA. Where does that take any of us ?

    We all have various views on stockbrokers but where do the jobs come from if we cannot fund small companies. Private investors are being pushed away from the AIM/PLUS markets. I just want a debate that will find a solution.

    Check out my video interview on willsandco.com. Thanks for reading this.

  6. Philippa Grocott 2nd March 2010 at 3:24 pm

    Thought this might add a little more weight

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