Pimfa board member and Richmond House Group managing director Paul Beasley has hit back at criticism of the trade body in a recent column from Money Marketing contributor Nic Cicutti.
Earlier this month, Cicutti argued that the Financial Services Compensation Scheme should continue to cover claims for unregulated investments, and that Pimfa’s position “compounds the insult to its members’ clients.”
The current status quo means that consumers will remain entitled to compensation for investments in high-risk schemes if they received regulated advice to invest in them. Cicutti argues that this should be the case because “the starting point for assessing a claim for compensation, whether paid by the FSCS or directly by a firm of advisers, should always be to consider whether the advice was suitable given the client’s individual circumstances”.
Pimfa, the trade body formed from the merger of adviser lobbyists Apfa and the Wealth Management Association, maintains that unregulated investments should not be compensated, despite a recent FCA paper on the FSCS dismissing the idea.
In a response to Cicutti’s article, Beasley writes: “This year 85 per cent of my firm’s FCA fees went to the FSCS. This demonstrates the clear failure of the regulatory system and should be a catalyst for change. We need to focus on prevention not cure to better protect both consumers and good advisers. Clear product labelling would inform and deter less experienced investors. Instead of having a page explaining Ucis buried in the FCA website where nobody can find it, a list of UCIS could be prominently displayed.
“Individuals must take some responsibility for their actions. They can only do so if they understand the potential consequences. Therefore we have argued for Ucis to carry clear health warnings that leave the investor in no doubt these are high risk products suitable for sophisticated investors only and excluded from FSCS.
“It is therefore disappointing that such a weak argument is followed by another cheap shot at the motives of professional bodies that are working closely with the regulator to drive better consumer outcomes. And yes, a financially strong and healthy adviser market is a key component of achieving better consumer outcomes. The interests of advisers and consumers are aligned which is why a more balanced and proportionate approach to regulation needs to be found.”