The FCA recently passed its first birthday and so far its focus has been to point firms towards better outcomes and address its principle objective of consumer protection. By embracing this and its competition objective, it has had to ditch the FSA’s mantra of not being a price regulator and instead express its concerns on such as incentives, inducements, closed funds, payday lending and the real costs of asset management.
It is clear that the industry was far from ready for the new interpretations being proffered. While the FCA is clear that none of its interventions are new and merely assist firms in understanding their responsibilities, the damage being inflicted should not be underestimated.
In particular, its guidance on incentives and inducements has caused providers and distributors to review their activities.
My fear is that in gifting us RDR adviser charging, the impact of reading such purism across other product areas means that large insurers will no longer be able to assist in funding training and events where mortgage and protection advisers can be persuaded and trained on what is available. Rewarding the best performers looks increasingly difficult as the need to disclose to the consumer all aspects of anything received takes the moral high ground.
When offering or accepting any invitation all parties need to evaluate any conflict of interest. My genuine concern is that fear of the regulator stops good firms doing the right thing because of the risk of retrospectively being judged to have transgressed.
So in the mortgage and protection markets, the FCA’s action risks stopping many of the events that allow providers and distributors to mix, discuss and debate informally, to produce an industry that to date has worked well.
It will be interesting to see if the FCA can achieve its aim of an industry which is any better able to serve the UK public.
Robert Sinclair is chief executive of the Association of Mortgage Intermediaries