The fear of regulatory intervention is an omnipresent factor for those who are designing new products for advisors and clients, says Mark Polson in this month’s Technology Spotlight column.
Over-regulation poses the risk of stifling new developments, but the FCA’s recent thematic review may help to encourage innovation.
The hesitation to innovate in the retail financial services industry is a problem at both the product design stage and when it is time to consider how to utilise technology to carry propositions to their target audience.
Mr Polson said, “Fear of regulatory intervention is the equivalent of the cilice (a spiky metal chain) which the mad albino monk dude in The Da Vinci Code wears around his thigh. It’s there to remind us; to stop us doing things we might otherwise do.”
The FCA recognised in its latest industry review that a lack of clarity may restrict engagement with customers, and therefore believes it important to deliver more precisely on the concepts of regulated advice, generic advice and personal recommendation.
In an effort to combat stagnation, the FCA launched Project Innovate, which provides companies with regulatory insight as they try to bring new models to the market, and Parmenion created Interact, which allows users to benefit from asset consolidation on a simplified advice basis. Money on Toast and Wealth Wizards offered automated/algorithmic advice efforts.
None of these offerings compose a complete solution, but that we may see parts of the answer within them.
“We need some new stuff to look at; stuff that isn’t rooted pre-RDR, in a world where it was direct vs advised and never the twain should meet. I don’t think we’ll lose much or any regulation, but if we can get to a culture of positive engagement rather than the financial services equivalent of cooking crystal meth in our pants in an RV in the desert, that’ll be a win in itself,” said Polson.
