Peter Smith, head of distribution engagement at TISA, takes a look at what is in store for the industry when the new regulator acquires its powers in April.
It was not so long ago that petitions to the regulator from the financial services industry concentrated on calls for level playing fields. Nowadays, things have moved on.
Reality is wielding a sharper edge. Firms are focusing far more on the serious and immediate practical implications of regulation as it relates to their business, rather than chafing about competitors’ deemed advantages.
In the new age of regulation we must all be ‘hurdlers’– and having made it over the Retail Distribution Review (RDR) fence at the end of 2012, it is time to be alert to the ‘jump’ that lies ahead.
Journey to the FCA
Come April there will be an automatic transition for those firms and individuals operating in the advisory arena and currently regulated by the Financial Services Authority (FSA), to the Financial Conduct Authority (FCA).
It is no secret that future regulatory reviews are going to emphasise the importance of governance, culture and controls. In particular, each firm has to be able to demonstrate that it possesses the ability to identify and mitigate risk on an ongoing basis, wherever it may lie in the advice chain, including in respect of any outsourcing. The RDR has set the scene.
Customer comes first
Martin Wheatley, CEO-designate of the FCA, has consistently made clear his thinking.
The customer must come first. Some may spy the glint of crocodile teeth in his observation that the ‘FCA offers a huge opportunity for the regulator and firms to start afresh, and work in partnership to reset how we deal with conduct in financial services’.
As the source and conduit of much pan-industry opinion, we also regard this as the right time to work in partnership – to ensure that the regulator is aware of the practical, technical ‘delivery’ issues surrounding its proposals.
Certainly, Wheatley sees reforming regulation as not just good for consumers, but for firms too. Few would question the merit of his intentions: to ensure that consumers can obtain financial services and products that meet their needs from firms that they can trust; that businesses should compete effectively with the interests of their customers and the integrity of the market at the heart of what they do; and to create sound, stable and resilient markets and financial systems with transparent pricing information.
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