View more on these topics

Professor John Kay calls for rethink of ‘intrusive and ineffective’ regulation

A leading economist has called for an overhaul of “intrusive” and “ineffective” financial services regulation to shift the focus away from “ever more elaborate rules”.

Professor John Kay led a Government-commissioned report last July which called for fund managers to align pay with client interests.

Speaking at an Association of Private Client Investment Managers and Stockbrokers conference in London this week, Kay said investors have suffered poor returns given the number of parties that take their cut such as advisers, platforms, nominees, trustees and fund managers.

He argued the last 25 years have seen the creation of a regulatory structure which allows “perverse incentives” which drive poor customer outcomes. He said the regulator should focus instead on helping companies raise money and provide good returns for investors.

Kay said: “We need to rethink the philosophy of regulation along structural lines. We have regulation which is on the one hand very extensive and intrusive, and yet ineffective in meeting the underlying needs of customers and companies.”

Kay said the move to separate retail banking divisions from investment arms is “just the beginning” of the kind of regulatory restructure he has in mind, with the focus on eliminating conflicts of interest rather than attempting to control them.

He added: “The thrust of regulation should be much less about the prescription of ever more elaborate rules and much more about the structure of the industry.”

Facts & Figures Financial Planners managing director Simon Webster says: “Professor Kay is right to say rules-based regulation does not work, as pages and pages of disclosure documents end up helping no one. This is a worthy idea but I doubt the regulator will pay any attention.”

Recommended

1

UK growth for 2012 revised up to 0.2%

The Office for National Statistics has revised its growth estimate for 2012 up from no growth to 0.2 per cent. The ONS has published its second estimate of UK GDP for Q4, which remains unchanged at a fall of 0.3 per cent compared to the previous three months. The latest figures show that between October […]

Markets tumble as Italian stalemate shock sparks new eurozone fears

The FTSE 100 and stockmarkets on the continent have fallen in early trading on the back of renewed uncertainty in the eurozone, following the election in Italy ending in stalemate. As of 0815 GMT, the FTSE 100 stood at 6,262.29 points, down 1.46 per cent from last night’s close. The Euro Stoxx 50 was down […]

John Greenwood MM blog

John Greenwood: At last…. IMA’s soft commissions stance deserves support

Fund managers have for years been misleading consumers about how much they charge for their services, that much is now clear. For decades fund managers have been hiding parts of their costs outside the AMC by paying their own research expenses through soft commissions. Now we have finally found out what has been going on, […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. To the adjectives “intrusive” and “ineffective”, many observers might well add monumentally expensive, profligate, self-serving, unaccountable, misguided, excessively bureaucratic and mis-prioritised. Which is why there’s such a pressing need for an Independent Regulatory Oversight Committee whose central remit should be to force the FSA/FCA to abide by both the spirit and the latter of the Statutory Code of Practice For Regulators.

    Without such a Committee, the regulator remains free to continue to set and pursue its own frequently warped agendas with total disregard for anything that anyone else may think or have to say on such matters.

    Meanwhile, the motorway pile-ups continue to unfold with everybody else being forced to pay to clean them up after the event. For its part, all the TSC appears to be able to do is frown and wave a disapproving forefinger in the direction of those who’ve allowed these disasters to happen. Hopeless.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com