The FCA has been called a "focused" regulator respected by its counterparts around the world. Praise indeed - but does the industry agree with this ringing endorsement?
Treasury deputy director of financial services strategy, Will Brandon, said at an industry conference recently: "It's hard to understate the importance, both to the consumer and to the competitiveness of the industry, of a robust regulator. The FCA is internationally respected and has an extremely strong consumer protection and competition mandate. It is very focused."
However, advisers subjected to increased scrutiny during the Retail Distribution Review (RDR) are sometimes less euphoric about the financial services regulator, no matter its guise.
Regulation has been "disproportionately focused" on the advice sector, said Personal Finance Society chief executive Keith Richards, leaving the majority of advisers "understandably sceptical". However, he argued, "the industry has got to understand there is a small percentage of people out there that do cause consumer detriment" and the regulator is there to make sure firms have good consumer outcomes at the heart of their business.
A new era of regulation?
Richards said regulation in the UK has often been "overly intrusive and misdirected", which has caused different levels of unintended consequence, such as the bank advice exodus following RDR.
However, now the point may be coming "where the regulator supports the industry in delivering better outcomes rather than simply policing against poor outcomes", he suggested.
"I think there is a genuine willingness from the FCA to improve the dynamics in the sector to make it more vibrant and to deliver better consumer outcomes. It seems it is prepared to learn from the mistakes of its predecessor and actually focus attention in the right areas."
For Richards, the RDR has been a new start for the advice industry. And while some sceptics say the "FCA is simply a rebadged Financial Services Authority (FSA)", there is a "growing consensus that the regulator is now more balanced and pragmatic in its dealings across the market", he said. "Hopefully, if we embrace it as an industry we will end up with a new era and more positive working relationship with the regulator."
For Dobson & Hodge financial services director Paul Stocks, the new regulator has more "bite" and "direction".
"All I can see from the FCA, when it comes out with things, you tend to see the logic behind it. When you read the theme that's coming out of the strands, it seems to make sense," he said.
"You feel like the FSA was very much principles-based whereas the FCA seems to be coming from 'principles are fine but we are going to insist on some hard and fast rules as well'. You feel like there's more direction there."
However, he suggested the FCA was focusing too much on just "regulating the regulated". "The issue in our profession is everyone can stand up and say they are a financial adviser," he said. For consumers, who did not know the meaning of regulated advice, this was dangerous.
"I periodically see things come across my desk or I bump into people who tell me things that happen and you think 'that shouldn't be happening', but it is," he said, referring to issues such as pension liberation.
"There is not enough public perception around the nature of regulation, the nature of the products, and the sort of questions to be asking to know what type of advice you are getting."
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