The recent Hobbit film ‘An Unexpected Journey’ is to be followed by two further instalments: ‘The Desolation of Smaug’ and ‘There and Back Again’ in a path that many hope will not reflect the regulator’s own journey. Though expectations are not high.
At the latest Owen James ‘Meeting of Minds’ event, response to the FSA consultation paper could be summed up by one adviser’s remark: “Great aspirations but so what?” Advisers feel that, for the most part, the terminology seems reasonable but questions remain over how exactly they plan to implement it. In the absence of this detail advisers remain very much on the fence, teetering on the side of sceptical.
Most advisers are, at best, neutral, unable to draw any firm conclusions from the paper. At worse, perceived schisms feel a bit Gollumesque. As one adviser said: “Listening to it, it is impossible and conflicting: there’s to be more intervention/less intervention; they’ll be more judgemental/more open”. Another concluded “if you wrote a business plan like that you wouldn’t get it past the board”.
Most concerns revolved around four factors:
1) Consumer engagement: advisers do not believe that this is something the FSA have traditionally done well. While the regulator claim they are talking to consumers one adviser spoke to a friend who had attended a session the FSA ran for the Women’s Institute which “seemed more like an opportunity to have a go at the industry rather than support it”, in her words.
2) Oversight of Parliament: The fear expressed was that this will amount to little more than showboating by treasury select committee and, more than likely, see an acceleration of more political and reactionary posturing.
3) Business model judgement: The question that most advisers ask is “how can the FCA make judgements about business models that they clearly do not understand?” Advisers point out that the regulator wants to know what the three year plan is with very little appreciation of the level of uncertainty in the industry and the assumptions that need to be made that cannot be currently.
4) Lack of detail: There is real concern over the possible (and many think likely) pendulum over-swing, made more severe by a perceived lack of accountability. The absence of detail does little to allay this fear.
Other than a name change the FCA will ostensibly comprise the same people and similar operations. While the claim is that culture will change advisers see no evidence of how, which concerns most given the proximity.
All quotes have been taken from interviews with qualified financial advisers