The fall-out from such changes could have a massive and prolonged impact on every firm in the sector. So, let me have three minutes of your time, as it’s about your business.
By the time you pick up this paper, the chancellor will have delivered what will be potentially his last Budget before the election. While it is true the Government may hang out for the last available day in May, the power to call an election rests with the prime minister and is therefore unknowable.
If I was a betting man, I would be laying good odds that regulation and regulatory structures will get a pointed message either in the speech or, more likely, in the follow-up notes from the Treasury.
Change is in the wind and it will blow in some new ideas. The chancellor recently asked Lord Turner to look at the causes of the banking crisis and set out proposals for reform.
The Conservatives undertook a similar exercise which led to the publication of the Sassoon Report – contributed to by a certain John Tiner – which called for a strengthening of the Bank of England’s powers for financial stability and a significant role in prudential regulation.
Vince Cable has just published his own thoughts on the crisis, why the banks were to blame and what should be done.
It would be hard to imagine a “steady state” persisting much beyond next May given the current political climate. As one front bench Tory recently stated: “There are no votes in calling for an end to banker bashing.”
The UK is not the only place where regulatory structures are up for review. José Manuel Barossa, president of the European Commission, asked Baron Larosière to review regulatory structures across the EU.
His review group – which included Sir Callum McCarthy – suggested a stronger role for the European Central Bank and new legal powers for the European committees that oversee regulatory actions.
Of course, a global solution may be needed to the banking crisis – hence the G20 agreement on a more formal supervisory role for the International Monetary Fund and the creation of the Financial Stability Forum to keep track of macro-trends and firms. After all, as Mervyn King stated: “Banks are global in life and national in death.”
If all this sounds remote, it isn’t. The plans being drawn today will have an immediate impact on every IFA firm. They risk changing the business landscape and, unless the IFA industry has a voice in this dialogue, the world will change around us.
Aifa will shortly publish a detailed review of the future of regulation. Members are invited to express their views and let us know what they want to see. IFAs will not sit on the sidelines and watch this time. After 10 years, we know what happens when you let others decide your fate. Never again.
Chris Cummings is director general of the Association of Independent Financial Advisers