For IFAs, the dominant issue of 2009 was the retail distribution review. June saw the publication of the FSA’s updated version of the future of regulation post-2012.
A central concern was the labelling of the different avenues of advice and sales of financial products. The RDR outlined plans for independent, restricted and simplified advisers but the requirements remain unclear.
Advisers pushed for better definitions throughout and it is predicted that some may turn their backs on the independent moniker.
Qualifications are another central issue raised in the RDR. June’s update ruled out grandfathering as an option for IFAs and it confirmed that all advisers must reach QCF level 4 by the end of 2012.
Many older advisers hit out at this demand amid fears they would be forced out of the industry. In November, Aifa warned it would launch a judicial review if mandatory requirements were not dropped. But despite this threat, it seems that for many advisers, 2010 will be a year for studying.
The RDR also detailed plans to ban commission payments, leading to widespread concerns that advice will become an option only for the wealthy.
As the regulator prepares to publish its latest update on the RDR before the end of December, the debate on the future of the IFA regulatory landscape will rumble on into next year.
Away from the IFA market, 2009 will be remembered as the year of bankers’ bonuses. Public anger over the speed and size of the payouts proposed for 2009 so soon after the near-collapse of the banking system prompted the Government to propose measures to curb bankers’ pay and conditions.
A new bill in this year’s Queen’s speech would give the FSA the power to oversee contracts, to create a committee to watch over the work of the tripartite regulatory system and raise money from financial services firms to pay for consumer financial education.
The pre-Budget report also introduced 50 per cent tax on bank bonuses.
Europe also featured on the regulatory map this year. Solvency II received approval by the European Commission in June and will come into force. Many of the details have yet to be finalised but UK-based life companies could be hit by tougher capital adequacy rules and standard annuity business are a particular area of concern.
The European Commission has also been undertaking its own wide-reaching review of financial regulation and an increase in EU supervision of the markets is possible.
The Conservatives set out plans to scrap the FSA, replacing it with a consumer protection agency and handing regulatory supervision to the Bank of England.