Regulator’s funding model is broken: Chris Hannant
Association of IFAs’ policy director enters the ring over increasing regulatory fees, FSA accountability and Arch Cru redress.
Chris Hannant took up the role of policy director at the Association of IFAs at the beginning of 2012.
One of his chief concerns is holding the government and regulator accountable for the multiple fees and levies imposed on financial advisers.
Between the Money Advice Service - which some advisers fear could become a competitor - to the Financial Services Compensation Scheme - which some advisers argue sees them pay for mistakes the Financial Services Authority should have spotted in the first place - the amount must cough up in regulatory levies is increasing with no sign of abatement.
Mr Hannant said: “Should the industry pay entirely for the Money Advice Service? I don’t think so.
“The original proposals were that it should be fifty-fifty, but I’m not even sure if that is right. If government wants to change people’s behaviour it should be incumbent on the government to finance that.”
Responding to recent calls for MAS to “push the regulatory boundaries”, Mr Hannant argued a public service offering regulated advice is the last thing we should want, even going so far as to label such a move “inappropriate and unfair”.
He said: “What particularly concerns me at the moment is because it is drawn purely from the financial services sector as is the FSA funding, there is not the same control on budgets that there would be, or the same scrutiny on expenditure that there would be if it was a government department.”
Whereas Mr Hannant says the Treasury keeps a “hawkish” eye on expenditure, the FSA is not held to the same level of scrutiny, and instead “writes itself a budget each year, consults and then just carries on”.
“The funding model is a broken one.”
Current policy dictates the FSA must have an annual consultation wherein it publishes its fee structure and the industry has an opportunity to respond.
However, Mr Hannant questions the validity of the consultation.
“There is part of me that questions to what extent that is a real consultation, because as far as I can tell the fees are pretty much what the FSA proposes.
“If the FSA says they need X million pounds, they usually go and collect X million pounds so it is a bit of a fake consultation.
“It is not worth putting too much time into it when you know no matter how much effort you put into it the result will be the same.”
Expressing his frustration at how “lightly” the larger institutions look to come out of the proposed £100m Arch Cru redress scheme, Mr Hannant said the problem is not so much the paying as the variability of levies.
“We have got to see greater predictability and stability. If you know you are going to be paying X amount a year you can manage that cost.
More on Companies & People
- ‘IFAs would rather consolidate than go restricted’
- Dyslexic man’s appeal over HSBC lending turned down
- RBS must take some blame for rogue cashier: Judge