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Wheatley: No ‘soapbox rhetoric’ from tougher FCA

Financial Conduct Authority chief executive designate Martin Wheatley has set out how the industry will be subject to a tougher regulator focused less on “soapbox rhetoric” and more on competition and good consumer outcomes.

Speaking at the launch of the FSA’s “Journey to the FCA” document published this morning, Wheatley said the new regulator will be more forward-looking, with “less regulation through the rear view mirror”.

He said staff at the FCA will be bolder and will concentrate efforts on thematic reviews rather than focusing on individual firms.

Wheatley said: “One of the questions I am asked is it is all very well talking about this culture change but you employ the same people today as the FSA did yesterday, so what is really different? Partly what is different is the legal powers the FCA will have, and partly it is the messaging from FCA chairman John Griffith-Jones and I about how we expect people to operate. We do expect people to ask tougher questions and be more intrusive. I want people talking to the chief executives and not the heads of compliance. I want to know where a business is going, not how it has complied with a set of rules.”

Wheatley said the FCA will continue to focus on its enforcement work.

He said: “Do not expect to see a change in our appetite to tackle serious cases of wrongdoing in the market. Credible deterrence remains central to our strategy.”

He set out the three outcomes of the FCA, based on putting consumers at the heart of business. These are that:

  • consumers get financial services and products that meet their needs from firms they can trust

  • firms compete effectively with the interests of their customers and the integity of the market

  • markets and and financial systems are sound, stable and resilient with transparent pricing information

Wheatley said the FCA’s competition work will see the regulator work closely with regulated firms.

He said: “We are not here to stand in the way of progress and innovation, we are here to ensure that progress and innovation yields good outcomes for consumers.”

Wheatley said he has noted a marked change in the “tone at the top” following last month’s report into how sales incentives drive misselling. He said chief executives have signalled they are changing how their reward schemes are structured as a result. But Wheatley said: “It it is still just words until we see the actual product of that delivered through the frontline into the products that are sold.”

Asked whether he was moving away from the “be very afraid era” set out by former FSA chief executive Hector Sants Wheatley said: “We do not want to be accused of soapbox rhetoric about whether we want the industry to be afraid or not afraid. Frankly our approach is focused on good outcomes.”

He added: “Our goals as the FCA are very clear. We will work for an industry that is better at serving the needs of consumers. It is a huge opportunity for the industry to press the reset button.”

Aifa policy director Chris Hannant says: “Regulatory authorities have previously had far too little public accountability for their actions.

“We would like to see clear and transparent outcomes set for the FCA it can be judged on. At present the proposed criteria are far too subjective. The role of the regulator should be to foster a successful financial services sector and encourage consumers to take positive decisions about their finances. We need clear and measurable objectives, such as the levels of savings and protection consumers have.

“The regulator has made clear it will take a more interventionist approach. A key measure of the success of this approach will be a reduction in compensation claims and overall levels of compensation. The regulator should be accountable for delivering on this objective.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. He said: “We are not here to stand in the way of progress and innovation, we are here to ensure that progress and innovation yields good outcomes for consumers.”

    Well forgive me if I do not believe that the RDR will deliver what he expects.

    With already depleted numbers of IFAs and collapse of major networks over past few years, it appears that the availability of an IFA to consumers is going to be limited by two things, cost and availability.

    Providers will not invest in innovation if there is a reduced demand for their products due to a reduced advising community.

    Best thing we could do is ban all financial products which are not deposit based and then there would be no need for the FCA in any event.

    IFAs are going to be a dying breed, I predict that the way these changes are being forced upon the industry with the daft time scale, means that not only will the industry lose a significant number of experienced advisers, any individuals who want a career in finance would be well advised to steer away from any form of advising role, the exposure and risks to individuals assets and prosperity have just escalated beyond all reason and the costs of the regulator, FOS, FSCS and the money pit the MAS has turned into, sends a bad message to the industry and the consumer.

    The admissions of failure by Lord Turner in his speech at the Mansion House recently should raise alarm bells in every advisers mind, these people were supposed to be cleverer than those they regulated, instead the same numpties who failed at the FSA are going to run the FCA

    You could not make it up, but it is terribly real and frightening.

    Be afraid, be very afraid (to misquote Mr Sants)

  2. ken170647 youtube 16th October 2012 at 12:19 pm

    “Consumer at the heart”? So, start by eliminating consumer choice in how to pay for financial advice.

  3. “We would like to see clear and transparent outcomes set for the FCA it can be judged on. At present the proposed criteria are far too subjective. The role of the regulator should be to foster a successful financial services sector and encourage consumers to take positive decisions about their finances. We need clear and measurable objectives, such as the levels of savings and protection consumers have.

    And, RDR is the starting point going forward? Epic fail before it’s even begun.

  4. No soapbox rheoric!

    ‘Shoot on sight’ Need I say more!

  5. “The FCA will be bolder and will concentrate its efforts on thematic reviews, with less regulation through the rear view mirror.”

    Hang on a minute ~ aren’t thematic reviews an FSA euphemism for hindsight reviews, i.e regulation through the rear-view mirror, which Mr Wheatley has told us is a practice that the FCA will not continue to perpetuate? These statements appear to be directly contradictory to one another.

    What the FCA needs to commit to is closer monitoring and analysis of products and activities BEFORE the brown stuff hits the fan, thereby obviating the need for regulation through the rear-view mirror by way of thematic reviews.

    Mr Wheatley’s comments appear to be exactly what he claims them not to be, namely soapbox rhetoric.

  6. “Every revolution evaporates and leaves behind only the slime of a new bureaucracy.”
    F Kafka

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