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The FSA doesn’t understand its own rules

So the FSA now admits that mortgage key facts illustrations are too long although, true to form, no comment is offered as to why this might be a problem, other than an increased risk of inaccurate content.

Given the ever-increasing volumes of text with which, at the behest of the FSA, we have to present clients, inaccuracies and confusion are inevitable.

The FSA routinely produces acre upon acre of regulatory material with which even-hardened practitioners have trouble getting to grips.Yet no guidance seems to be available as to how all this material should be interpreted or implemented or at least no consistent guidance, because five phone calls to five different people within the FSA yields five different answers on just about any subject that you care to mention.

How is an industry supposed to function properly when not even the rule-makers understand their own rules or communicate them consistently to their own staff? Well, of course, it does not, which is one reason why it is in such a mess.

Fairly soon, the FSA will start suggesting that suitability letters are too long, yet no practitioner in his right mind will omit anything on which he might later have to rely as part of his defence of a complaint.

If past experience is anything to go by, we can be fairly confident thata few years hence, the FSA will fabricate yet another misselling debacle on which it failed to provide any sort of proper guidance at the time and hold advisers to account for what they should have but had no idea they ought to have done five years earlier.

Many clients probably do not read, still less understand, every line of a great long suitability letter before they commit to whatever product has been recommended.

However, if anything goes awry at some time in the future, you can bet good money that every line of what you wrote will then be scrutinised in the minutest detail and not just by the client.

The other looming risk, of course, is that a client complaint will succeed on the grounds that the huge quantities of pre-sale material with which he was provided were so excessive that no reasonable layperson could possibly be expected to have managed to comprehend it all. The result?A missale.

So we are damned if we do and damned if we don’t. Isn’t regulation wonderful? It certainly costs enough and then some.

Julian Stevens

WDS, Bristol

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