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Peter le Beau: Have regulators done the right thing?

Customer detriment still exists 25 years on from the original FSA

I think there is an understandable feeling that we have a unique burden to face in the UK in terms of regulatory scrutiny.

The Government (ultimately) has tried to regulate financial services over the last 25 years since the original Financial Services Act was passed. Is that a cause for celebration or indignation?

There is probably a book to be written on the way financial services has been regulated in terms of the philosophy, personalities and effectiveness of approach over those years. I will not list the failures as space is limited in my column but I guess the Tories, when framing what came to pass, would have been deeply disappointed with the problems that arose (and still remain in places) over those years. I do not think it is a book I would load on to my Kindle in fond anticipation of a rip-roaring read by the pool on holiday.

I met a Dutch technology firm, Lean Apps, the other day. Impressive as most Dutch businessman usually are, they had a healthy respect for Dennis Bergkamp and a very good working knowledge of their own form of the RDR which bans commission and extends to protection. It might be be worth seeing how that one pans out.

The Aussies already have Fofa (Future of Financial Advice) which bears more than a passing resemblance to the RDR and comes into force in July. It seems there really is nothing new under the sun.

It is interesting to see different countries moving in the same direction a quarter of a century after we first tried to tackle the problem. What does this say about the difficulty of policing an industry and protecting the consumer?

I know some extraordinarily reputable and professional advisers who know their business inside out and follow high ethical standards which would be the same if no regulation existed. On the other hand, we have a lot of advisers who are taking their first tentative steps in protection so they can continue to generate a commission income. Nice to know after 25 years of identifying customer need that they have at last realised their customers might need protection simply because it is in their financial interest to point it out.

This rambling analysis is drawing me to the conclusion that customer detriment still exists and is extraordinarily hard to eradicate without the dread hand of compulsion or Government-backed financial engineering.

Frankly, it is impossible to get a whole industry to do the right thing when no one is quite sure what the right thing is and the consumer (with very good reason in some cases) does not trust the industry, whatever it does. But the consolation (if that is the right word) is that the whole world seems to be having the same problem.

Peter le Beau is managing director of Le Beau Visage

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