The Conservative pledge to replace the FSA with the Bank of England and a Consumer Protection Agency has been widely discussed. My challenge has been to sort out who would be regulating IFAs in future – and what the new structure would mean. Hard to believe it could be possible but there is no point closing the door on one regulator just to inherit two, with more cost, more prescription and even more red tape.
Some of the proposals in the RDR will result in fewer consumers getting access to financial advice, so this is hardly a positive move. I am also concerned that all the attention has been focused on reforming regulation, when the role of the FOS needs to be reviewed in parallel
The conference season is a great opportunity to meet with ministers and their shadow opposite numbers to put the case for IFAs. Their civil service, or party “minders”, can be shaken off and a more open conversation had. By targeting the various party conferences, it has also been possible to speak to each of the relevant people and get under the skin of their parties’ more public pronouncements and start talking about the detail.
I think it is widely recognised that my view is our current regulatory structure is far too expensive and we often end up with regulation that is appropriate for one part of financial services but entirely wrong for another.
For instance, the debate about levels of capital is entirely appropriate in the banking community (who caused the global crisis and were over-leveraged) but has far less relevance for IFA firms.
Indeed, with the combination of professional indemnity insurance and the existing regulatory capital rules, attention should have been focused on leaving assets behind when a firm closes, not on arbitrary levels of capital.
Further, some of the proposals in the retail distribution review will result in fewer consumers getting access to financial advice, so this is hardly a positive move.
I have also been concerned that all the attention has been focused on reforming regulation, when the role of Financial Ombudsman Service needs to be reviewed in parallel, otherwise we risk creating another regulator – or leaving gaps in the structure.
Aifa has been welcomed into the discussions about the shape of future regulation. We are holding top-level meetings with senior politicians as we help design the future structure for regulation.
A seat at this top table would have been unimaginable just a few short years ago and it is now available to us because the IFA profession has seen the benefit of speaking with a single voice and presenting a united front – in the same way that the banks and insurers always have.
Members can be certain that we will be setting out our wishes to see a better, cheaper, more accountable regulator that, in protecting consumers, understands that this is best done by helping them access independent financial advice.
Chris Cummings is director general of the Association of IFAs