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Peter Hargreaves: Repeal every ‘mad’ regulation over past 15 years

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Peter Hargreaves

Hargreaves Lansdown has railed against the adverse impact of government inaction and regulation on the funds industry, saying the situation has gone “completely mad”.

Speaking to Fundweb today following the platform’s annual results, Hargreaves Lansdown co-founder and executive director Peter Hargreaves says UK regulation has “gone mad” for many industries but especially the funds sector.

He says: “Clearly, the funds industry has borne the brunt of this regulation. A good law I would pass if I was in charge would be to repeal every bit of regulation that’s been enacted over the past 15 years. It is crazy.

“For every single fund we suggest in our Investment Times, we have got to send the full key facts literature. That’s two sides of stuff which no investor will ever read but we have to send it out.”

Hargreaves points out it is often simpler to tip a share, which is deemed a risky investment, or sell a with-profit bonds, which he labels “one of most opaque investments”, than it is to recommend a fund.

“Funds, which are transparent, have been hit with all the regulation. It is easier to see what is going on with funds, so they decided to regulate against that – the bits they couldn’t see were too difficult to regulate against.

“This means some brokers are going to be selling the bad and the opaque because actually they can earn more money out of it.”

In the platform’s preliminary results to 30 June, published today, chief executive Ian Gorham says Hargreaves Lansdown’s successes to date have come “despite regulation and government apathy in supporting investing”.

Gorham says: “It is easier to promote gambling, alcohol or payday loans to the UK public than the concept of investing in reputable investments or financing British companies to support our economy. That needs to change.

Gorham also reiterated calls for the Financial Conduct Authority and other bodies to do more to support the UK’s funds industry.

He says “The FCA, working with the Treasury, has the opportunity to take a fresh look at achieving sensible regulation and make it easier to encourage the UK public to invest.”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Having just been sent by Invesco Perpetual (as an investor) a thick fund annual report brochure by for a children’s fund I invested in over 10 years ago I am inclined to agree that simple steps could cut costs and increase efficiency as well as lowering carbon footprints! For example a disclaimer to say this level of detail is available on their website for those that want it rather than sending it to all – I am not even putting in more money! As for the point re the under-regulation of hugely profitable payday lenders, and how they market themselves to prey on the most needy in society, well that is a whole new can of worms. Payday loans for many will be a train crash that could be far worse than any endowment or payment protection insurance scandal, and probably with less consumer recourse too. A ban on Payday Lenders sponsoring football teams akin to tobacco and F1 would be a good first step.

  2. There is denying it, he is right !!

    However I am sure the FCA will disagree ?

  3. “It is easier to promote gambling, alcohol or payday loans to the UK public than the concept of investing in reputable investments or financing British companies to support our economy”.

    How true is that statement.

    The lunatics are well and truly running the asylum of regulation and bad legislation from the small IFAs point of view. Seems the larger companies think the same. Now lets see if the great and good who actually understand FS will stand up and say what we all know to be true.

  4. I noticed he was very careful to use the word suggest or that money marketing has recorded it that way. Surely, he has benefited from the lack of regulation in the execution only market up until fairly recently. Could it be that Hargreaves Lansdown are now having to comply with the same regulations that small IFA practices have to carry out.

    I would agree that there needs to be a simplification of the paperwork provided to consumers but I do agree with the principle that there should only be one rulebook within financial services and Hargreaves Lansdown should comply with advice rules if they are giving so-called suggestions on fund choices.

    “For every single fund we suggest in our Investment Times, we have got to send the full key facts literature. That’s two sides of stuff which no investor will ever read but we have to send it out.”
    As far as I’m concerned, if they’re making suggestions then they are making a recommendation and should be conducting a full fact find, attitude to risk assessment and sending a suitability letter just like every other IFA practice or advice firm.

    After all is an execution only meant to be the client choosing the investments not receiving a suggestion or a hint.

    One rulebook one interpretation instead of the mess that we have at present!

  5. It is worth noting that most of this information overload is driven by European Directives and the FCA can do nothing about about it e.g. UCITS IV.

  6. I agree, time the FCA looked at the paperwork across the industry.

  7. Yet more evidence, were any needed, of the desperate need for an Independent Regulatory Oversight Committee with the unassailable authority to say to the regulator either This is wrong and you aren’t going to do it or This is wrong and you’re going to have to undo it.

    I would have thought that Peter Hargreaves, with his great wealth and significant profile in the industry would be spearheading a campaign to bring this about.

  8. FCA requirements for issue of items is durable medium, so the definition of durable medium is what need sir be followed. We email KIIDs, KFDs KFIs OR send a link to the document or poost hardcopy, whichever the CLIENT wants.

    The requirement for a suitability report is also a report on a djurabke medium, so it cuild be on
    papyrus, stone, Roman Army waxed tablet or it could be a sound recording on a wax record, vinyl, probably not tale or fax as they are not durable. Arguably, bearing in mind the Quo ran was an audio social story before being written down, it could be a report memkriswd word for word.

    The EU however is discussing mamkkng paper mandatory, which will not work for the blind or illiterate.

  9. “The FCA, working with the Treasury, has the opportunity to take a fresh look at achieving sensible regulation and make it easier to encourage the UK public to invest.”

    The vast majority of investors want to know just three things:-

    1. What’s the proposition?

    2. What’s it going to cost? And

    3. What are the risks?

    By and large, they don’t want and nor do they want to have to pay for anything more. Either the FSA cannot see this or it does see it but refuses to recognise it.

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