View more on these topics

TSC chief Andrew Tyrie thinks FSA will listen to reason

Treasury select committee chairman Andrew Tyrie says he is confident that the FSA take account of the recent Parliamentary RDR debate and evidence sessions in the forthcoming select committee consultation on the RDR.

In an interview with Money Marketing, Tyrie says he also hopes that the FSA will listen to any recommendations the committee makes.

Tyrie, who is Conservative MP for Chichester, says: “I am confident the FSA will listen to what was said in the Parliamentary debate and to what we receive in our consultation. I would be very hopeful too that it will pay attention should we make any recommendations.”

The TSC called for written evidence from the industry on the RDR last month and will decide whether to take its consultation further on the basis of the evidence received.

Tyrie says: “It is clear to many people, including IFAs and wealth managers, that there is a problem. It is not clear to everybody what the solution is. The FSA has a proposal which has generated quite a bit of criticism, one of which is it is a onesize-fits-all approach that may cause consumer detriment. We need to examine that carefully.”

Tyrie spent six years on the board of Rensburg Sheppards, which he says taught him about the wealth management industry from the standpoint of IFAs as well as a wealth management business.

He says too many changes to the tax and regulatory treatment of savings in the past have hit public confidence in saving and have affected IFAs.

Tyrie says he is concerned about the savings ratio. In June, the Office of Budget Responsibility predicted the ratio would rise from 7 per cent in 2009 to 7.3 per cent in 2014. By November, it had revised that to fall from 6.3 per cent in 2009 to 3.4 per cent in 2014.

The OBR put the change down to a drop in unearned income such as company dividends and says the ratio is “volatile and liable to revision”.

Tyrie says: “There were not many big changes in the OBR’s fiscal forecast on the basis of what they put out in June but one key area which was radically altered was their forecast for the savings ratio which was broadly halved. It is clear at a time when the savings ratio is falling well below its long-run average and after a period when many individuals and businesses overborrowed, we need to ent-rench the savings culture.”

With the regulatory structure in flux, Tyrie says it is not surprising that we are yet to see proposals from the Government in terms of savings but he says these are “issues for next year and beyond”.

He says it is important that the regulatory changes do not lead to a system which appears to insulate the FSA and its successors from the risk of regulatory failure and, as a byproduct, has the effect of driving business out of the mass market.

He says: “It is the mass savings culture above all that we need to foster.”

In 2000, Tyrie co-wrote Levia-than at Large, a book looking at regulatory issues, including accountability, which offered 29 proposals for improving the FSA. The first was for competition and competitiveness to be statutory objectives. Both are issues the committee has heard evidence on during its inquiry into the Treasury’s proposed changes to the regulatory structure.

Tyrie says: “Competition and competitiveness were not listed as one of four statutory objectives but only a principle to which they FSA would have regard.

“We heard evidence in public sessions and have been told repeatedly the so-called ’have regard to’ principles are of little or no practical value.

“Accountability is an issue that is constantly being raised by people in the business. There is always a risk that when a powerful quango independent of the Government is created, they can become accountable to nobody but there has been a measure of accountbility to Parliament with regard to the FSA.”

He adds that the committee has not yet reached a formal view on either subject.

Later this month, the committee will take evidence from the European Commission int-ernal market and services commissioner Michel Barnier to address the fit between UK and EU regulatory architecture.

Tyrie says: “The UK, by a long way, has the biggest chunk of most European markets in fin-ancial services and Europe’s glo-bal competitiveness in this area depends in large measure on us continuing to get it right here. I expect and hope that point is not lost on EU regulators.”

While everyone is focusing on the mop-up of the financial crisis, he says it is important to remember the opportunities presented by change.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. Thank goodness Andrew Tyrie was elected Chair of the TSC, a Committee which is an important cog in the regulatory system, it gives me confidence to see the right questions being asked after having to endure a structure of accountability which has lacked any checks and balances in the past.

  2. Is the Leviathan about to be tamed? Or, better still, slain?

  3. At last someone who is asking the right questions! thank you Andrew!

  4. No one can object to anyone who listens to our concerns and those of our clients, but listening is one thing, doing something about it is another and unless the FSA have a complete change of attitude then “hopeful” may be too strong a word to use here.

    Decisions need to be made now though as those experienced advisors planning to leave the industry due to the FSA requirements need time to wind their businesses down or sell them on and find alternative employment, which is a shame when consumers need good financial quality advice and help more than ever. It is after all clients who will suffer when they leave.

    If the FSA wants to help consumers then I fail to see how they will achieve this by making policies that force 10% to 20% of experienced advisors leave the industry.

    RDR I suspect is only just one reason they wish to leave but it is the catalyst that is pushing them over the edge.

  5. Consider the consequences of this not happening and instead Andrew issues the following statement:

    “The FSA will not listen to what was said in the Parliamentary debate and have ignored the TSC consultation recommendations, as a direct consequence an estimated 20%* of the IFA sector will leave the industry together with their support staff and related IFA provider support staff.”

    And this is all due to a discredited regulator basing their industry redesign on an after dinner speech by Callum McCarthy at Gleneagles.

    This speech had as much validity as the intelligence gathering behind the weapon of mass destruction that prompted the misguided Iraqi war.

    The real question must now be how an unelected, unaccountable quasi judicial Leviathan at the height of its own miserable failure was allowed to take independent advice to the edge of an abyss?

    The FSMA 2000 needs to be repealed and the FSA replacements need to be just that – a replacement and not a rename!

    Even as we speak Mark (rubber stamp) Hoban MP takes RDR advice from an RDR Implementation Committee headed by bankers, advisers to banks and FSA officials who have the blood of earlier failure on their hands.

    God created man in his own image (Genesis 1:27) and the RDR Implementation Committee packed with bankers, advisers to bankers and FSA official are designing our future industry in their image. Mark Hoban MP is their representative on earth!

    *FSA figures – disputed by other findings that suggest a far greater impact

  6. At last! After over ten years of people with no experience running the financial system from the unqualified Banksters in the board room to Treasury and FSA officials who have mostly exited stage right with wads of our money in their back pockets. We have it seems some people in almost the right places to bring their knowledge and experience to bear to help sort the mess out.
    Lets hope that they can bring some sense to RDR it is quite amazing that in every other sector you care to name the Government is striving to bring the Consumer or Patient or student choice and flexibility to change as they progress through life but in Financial services they propose to take it back to the 1970’s.
    Good for Mr Tyrie and Mr Garnier and Mrs Baldwin and all those 78 other MPs.

  7. The FSA have not listened to reason so far, they have done as they want, so the chances of listening to reason now is unlikely. I have more chance of winning the lottery and I dont do it.

  8. I think the only thing to which the FSA will listen is the music at their Christmas party and the screams of their staff if the FSMA is repealed and all of them are barred from applying to join the new regulator (and that ain’t going to happen, even if it should!).

    I’ve been an advocate of proper regulation since I started in insurance and savings 38 years ago, but what we’ve had so far is abject and utter failure, several scandals which were then retrospectively legislated, a failure of the consumer to understand what was going on and an attendant reluctance to save or insure properly and a banking scandal which nearly caused total ruin of our economy.

Leave a comment