The FSA spends too much time and money chastising small firms for the problems facing the financial services industry, and not enough pursuing the biggest culprits: the banks.
A nationwide poll reveals the majority of advisers feel the regulator spends a “disproportionate” amount of its time monitoring low-risk organizations who, they claim, account for the tiniest percentage of complaints in the industry.
The study, organised by Incisive Media Buzz, also suggests advisers feel the FSA failed in its duties over the Northern Rock crisis and is no longer fit to regulate complex issues affecting the economy.
Ron Pritchard, chief executive of IFA Clarkson Hill, says if the FSA wants to solve the biggest problems facing the industry it needs to redirect its resources away from the small adviser.
“There is a general misconception about IFAs,” he says. “If you look at the statistics, most have absolutely no complaints made against them whatsoever. Most of the complaints they get are from the 10 biggest financial institutions: the banks and building societies.
“And yet the Retail Distribution Review seems to be designed in their favour.”
Another adviser, who wishes to remain anonymous, says: “The FSA seems to spend a disproportionate amount of its available time monitoring low risk organisations such as IFAs.”
Another adds: “Regulators in the finance industry seem incapable of sorting out the major problems and concentrating their efforts in the right areas.
“[It is] far easier to hit small businesses that are no threat to the economy than have the expertise and understanding to regulate the danger areas.”
The survey of IFAs found 69% thought the regulator had failed over the Northern Rock crisis.
Just 8% of respondents said the FSA did not fail in its duty over the summer crisis, which saw the bank propped up with over £50bn of taxpayers’ money.
However, many respondents claimed the Bank of England and the Treasury were also to blame for the debacle.
On adviser says: “The FSA were at fault, but they were not alone. Blame should also be laid at the doors of the Bank of England and the Chancellor. We will probably never know what really happened.”
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