Stephen Hagues – the Distribution revolution has moved.
FSA/FCA – Time to re-build the regulator?
Published October 8, 2012 Financial Services News 16 CommentsTags: Financial Services, FSA, ifa, RDR
Tags: Financial Services, FSA, ifa, RDR
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Stephen Hagues...The Distribution Revolution 
So true and such a shame for the industry
The Financial Services Industry, like the proverbial baby was thrown away with the bath water many years ago. The FSA have searched the drains and have tried to rebuild it with what they found there.
I don’t entirely agree with either the FSA or you!
There is a tension between an innovator and any regulator; the innovator will be trying to keep as much money as possible and the regulator will want the costs to be minimised. No one designs new stuff for nothing and someone HAS to pay.
In a true free market, business will go to the most efficient, as everyone will know who that is, but this is NOT a true free market. The regulator is supposed to be stopping the exploiting of clients as cash cows and marks in a confidence trick; in this they have failed. (Don’t tell me that all business entrepreneurs are altruistic angels as this is also manifestly untrue!).
1. Friction is not inevitable as you correctly point out but it can be useful. It can make sure everyone is accountable and doing their job correctly. The problem is, I don’t believe the FSA see it as being 2 way. Let’s not forget that the biggest financial disaster in living memory happened on their watch probably because there was not enough friction going their way.
2. Entrepreneurs can also be crooks and swindlers. In fact, their propensity to take greater risks also means they can cut corners. Good entrepreneurs should be rightly congratulated and the regulator should properly protect us from the bad ones.
3. In a true free economy the public would choose but this industry is regulated. So the FSA has every right to set out what best practice looks like and expect as many firms as possible to adhere. Would you be happy to go to an hospital than can pick and choose how to treat you?
The real problem here is that many hard working people, with the customers best interests have been sadly let down by the financial services industry. Is the regulator guilty of crony-ism?… yep but product providers, advisers, banks, networks have all done their bit to take what they can from the public’s money.
Stephen
I take a simpler view.
It would seem that David Cameron is not the only Brit not to know the Magna Carta wordings. Regulators don’t know either.
In this country a man is innocent until proved guilty. But compliance organisations all seem to start from the opposite point of view, ie all brokers are up to no good and we will prove it, and if we can’t prove it that means they have managed to conceal their misdemeanours from us.
Interestingly when one reads the money advice pages of our newspapers, rarely if ever have I seen a reader complaining about a small broking firm. Direct writers, banks, on-line quotes etc yes, but never the small broker.
Dear Stephen,
I totally agree with your comments .
Regards
Brian
It is sad that the Country is in a recession, the government give the public EIS and SEIS to invest in, yet advisors, may soon loose the right to assist individuals to certify that they want the risk of investing and helping the businesses grow, please convince as many people as possible to reply to the latest consultation paper on suitability
words of wisdom indeed…
This is the kind of incisive view that needs to be heard by the TSC (Andrew Tyrie or someone with real power to influence affairs)
Hi Stephen
The only happy IFAs I see around are retired or left the industry.
So as a retiring IFA you must be happy.
Stephen
I loved your anecdote from the woolwich, I couldn’t agree more. Business recruitment always trend towards the individual at the top or at the top of a dept.
The FSA have destroyed our once great industry, both so far as IFA’s and Brokers are concerned. They have equally damaged the public and continue to do so.
We are governed by a QUANGO, designed to fail, and seemingly designed to damage the market as a whole. There should be an independent inquiry into how Sant’s and Co. have behaved, and I believe if truly ‘impartial’, would most likely find them guilty of ‘Criminal Negligence’… they seems to be little more than an agent provocateur for the banking industry… and just look at what the banks have done to our industry/economy/lifestyles…
Personally, I believe a set of gallows in Canary Wharf would be nothing short of a good thing… harsh I know, but in perspective…
An excellent summary ! you should circulate it to all members of parliament, including of course the treasury select committee
First Class Steven.
What more can be said.So, so true.
Carl
Dear Stephen,
Thank your for a well written and thought provoking piece.
Very well done and you hit the nail on the head!
Kind Regards,
Phil
Dear Stephen
Thank you very much for pointing in the direction of this article and please accept my apologies for the delay in responding, but I’ve been away in the Republic of Ireland at the Five Nations Congress, at which the issue of financial regulation came up.
I cannot believe the comments of Linda Woodall at the FSA and it’s probably good job that they won’t be around for much longer. However, her comments really show the approach the regulators are taking and it is one of hostility and conflict, rather than working together to minimise risk and maximise benefits to all.
These comments will be very in my thoughts as I begin the process of discussing financial regulation within the care sector.
Best wishes
Martin