The Invesco Perpetual fine has stolen the headlines recently, but given that the fund firm is more than capable of setting things to rights, perhaps this doesn’t present such a challenge to advisers or clients.
Surely the drip, drip of fines, bans and ombudsman rulings concerning Sipps, Sipp charges and Ucis investments is of more concern for advisers.
In the past couple of weeks alone, these have ranged from firms fined and banned for pushing thousands of investors into a Sipp, which saw huge amounts then invested with Harlequin, to an ombudsman ruling against an adviser for taking out too much in charges in the early years of a Sipp plan. We also have a slew of firms falling on the compensation scheme over Ucis.
Of course, not every fine, and certainly not every compensation award, is fair on the adviser concerned. But one gets the feeling that, amid the heap of problems, the FCA is still grappling with the wilder shores of financial services regulation.
It is also getting more and more concerned about disclosure in relation to the RDR. Its programme of work includes checking on vertical and in-house fund arrangements and recommendations, as well as making increasingly threatening noises about how advisers are disclosing their fees – cash equivalents, please.
It may not be fun for advisers themselves, but there is no point establishing a reform designed to deliver, in regulatory parlance, better consumer outcomes and then not ensuring it delivers them. Yet this highlights one problem.
The FCA – and the RDR it inherited – may have made it more unlikely for someone to be missold in the conventional investment adviser space. They may have made it less likely for advisers to make mistakes in the first place, and that helps not just those particular advisers but everybody else in terms of regulatory fees. But what if it hasn’t got a grip on the wilder borderlands?
What if the RDR, enforced rigidly or not, hasn’t actually equipped the FCA to stamp out the worst behaviour in the market?And this is before we take into account the not-insignificant pension liberalisation. An already tough task has been made substantially tougher. What if the RDR, enforced rigidly or not, hasn’t actually equipped the FCA to stamp out the worst behaviour in the market?
It is true that some of the problems that have come to light recently are historical – although not all that historical. The headlines are the result of various regulatory authorities actually taking action. But where on earth does it leave the industry if in five or ten years’ time things have actually become worse?
The Association of Professional Financial Advisers’ director general, Chris Hannant, wants the rulebook halved in length from its current 8,000 pages.
Obviously, it needs to be brought down from Domesday proportions to something more manageable – if only to preserve the sanity of the UK’s compliance officers.
That aside, surely a shorter book could also make it much easier to differentiate between wilful non-compliers and those who have strayed over the line, with sanctions designed proportionately and appropriately as a result.
John Lappin blogs on industry issues at www.themoneydebate.co.uk
