Regulator has come under fire for spending such a large amount on new search function
In October, the FCA answered our Freedom of Information request, revealing it has spent £200,000 adding a search function to its register.
The news was met with widespread criticism from the advice sector and incredulity that so much had been spent on a relatively simple change.
Some did argue that £200,000 from an annual funding requirement of £544m (according to the FCA Business Plan 2018/19) was insignificant. But that argument misses the point.
Firstly, £200,000 is the amount spent to date. The search function is still being tested and further changes are inevitable. At least they better be.
Secondly, spending so much on a relatively simple change does not represent good value. At a time when the cost of regulation is increasing, surely advisers have a right to expect the FCA to spend its budget wisely? A multi-million pound budget does not mean money can be spent frivolously.
Thirdly, the advice community and the consumers it serves deserve so much better than the register in its current form.
The British Steel debacle was the catalyst for the FCA to reverse its plans to reduce the scope of the register. And I am pleased it did.
The addition of the search function was the first step in its expansion. However, while the intention may be laudable, the early signs are not encouraging.
Most consumers will have simple requirements from the register. If they are using it to carry out due diligence, perhaps on an adviser recommended to them, they need to be able to do the following:
- Easily find the information they are looking for;
- Understand the information they are presented with;
- Trust the information is accurate and complete.
At present, the register is failing to deliver. The issues with results generated by the search function have been well documented elsewhere. But more fundamentally, I suspect most will not understand the results of their search.
Take this from the listings of appointed representatives: “This is a firm or individual that can act on behalf of another firm (its principal) that is authorised in the UK or regulated in another European Economic Area country. The principal is responsible for the appointed representative’s activities.”
Or this: “This firm has requirements or restrictions placed on the financial services activities that it can operate. Requirements or restrictions can include suspensions.”
With this in mind, we must question the FCA’s rationale for starting to expand the register’s scope by adding a search function.
Why start there when you need to be a financial services expert to understand the results?
Surely it would have made more sense to address the impenetrable language used? Or, at the very least, provide a glossary of terms before investing £200,000 in a search facility?
Why is this important?
In an era of financial scams, consumers need a central register where they can carry out basic due diligence on regulated firms and individuals.
This is not the role of the commercial directories, which cannot force every firm or individual to appear and whose main function is to match consumers with the
Ideally, the register should go further too. In 2018, it is astonishing there is no comprehensive record, easily accessible by consumers, of the basic information (qualifications, accreditations, independent status to name three) that might be helpful when choosing an adviser.
I recognise there are issues in connecting all stakeholders together. However, for the good of consumers, it is time for all parties to get together and create a meaningful register.
It needs to be driven by the FCA, with other stakeholders playing their part.
Consumers and those who advise them deserve better than what is being delivered right now.
Phil Bray is director of The Yardstick Agency