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Take the directive route to Europe

Look, I am sorry – I know that few of you have much interest in the European Union. But someone has got to take an interest and that someone is me and it’ about time you shared in the experience. I will try to make it relevant so stop turning the pages, looking for Out of Context.
The reason for bringing the subject up is that a lot of regulatory change starts in Brussels and then gets implemented here by the FSA. Many of the papers coming out of Canary Wharf in the next few months will owe their origin to some piece of EU co-ordination.
This is all in the cause of the Financial Services Action Plan (surely you downloaded the simple guide from the FSA website – you know you meant to).
The great plan is to create a single EU financial services market by 2006. The eggs which need to be broken to make that omelette involve the removal of regulatory barriers and the creation of some sort of equivalence across regulatory regimes.
Take the distance marketing directive which covers “remote sales” of financial products. Clearly, if an adviser in Greece phones a consumer in Manchester, he or she should get the same information as if the adviser was in Chester.
Then the fun starts – the FSA issues a consultation paper (CP196 for those of you who collect train numbers). This asks us to define what a distance communication is.
Should we apply a literal simultaneous physical presence test, a meaningful simultaneous physical presence test, or a face-to-face test? Answers on a postcard, please. Correspondence cannot be entered into. I last answered questions like this when I was studying philosophy.
But what is the point of tying ourselves up in these knots? I do not buy the commonly expressed view that only the UK authorities take the implementation of EU directives seriously and we all suffer the consequences. My colleagues in other EU trade bodies certainly do not feel that way.
Where I think the UK needs to revise its approach is in its legalistic interpretation of what a directive requires of us. I know how directives are drawn up – the discussions are broad brush, high level, to do with outcomes not detailed wording. UK lawyers do not accept that concept, pragmatism goes out of the window and pedantic interpretations which ignore the purpose of the directive fly in.
Well, I am on pedant watch and I will be doing my level best to reverse this trend which imposes the costs of change on you to the benefit of no one.
I have another campaign. I can buy the idea of a single wholesale market in financial services. I cannot see a retail market emerging. The reason your clients are not poached by brokers based in Nice has more to do with culture than regulatory barriers so there is little point in changing retail rules in the vague hope that this will change consumer behaviour. Regulators must focus on the markets where barriers do make the prime difference.
Nearer home, may I welcome the Skills Council (or David Jackman wearing another hat). The architecture of the examination review looks on the right track. I think this could give you all a chance to develop new entrants to your businesses and give the next generation of advisers something to aim for.


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