FCA is steamrolling over an industry with few friends

The industry has not exactly been winning many arguments. The FCA, perhaps unlike its predecessor the FSA, now appears to be tough on banks, insurers, IFAs, wealth managers, payday lenders and the rest.

I would argue that, at the very least, this demonstrates that the era of ‘big is beautiful’ endorsed by regulators has well and truly passed.

My view is that the high watermark of bank influence was the first version of the RDR. This was when regulators were seriously considering a system that would have massively boosted the banking sector’s role – they were perfectly open about this – while hitting IFAs with a ridiculously high bar on both qualifications and model in order to advise.

My view is that the high watermark of bank influence was the first version of the RDR

Advisers won some key arguments at the time, but such successes have largely been forgotten. Many advisers did not view the final outcome as much of a compromise, but at least the banks and insurers did not get to stitch up the market with primary advice multi-ties, as was once on the cards.

Now, much is being made of the influence of the big players again, but I would question any evidence of this. The price cap on auto-enrolled pensions is to be reduced to 0.75 per cent. This is, for most of the industry, a huge reversal. It is also incredibly disruptive and impractical.

But the big battalions’ – and, indeed, the small battalions’ – lobbying efforts have not appeared to have cut much mustard, even when their case was strong.

Second, the whole pension liberalisation development is one that surely runs contrary to the interests of most of the established pension industry. The annuity book will no longer be a source of easy money. It is, indeed, almost impossible to believe that the traditional pension industry would have designed the reform in this way. They will retain funds under management for less time. Fund managers and advisers have won out and yet I see little evidence they were asking for such a root-and-branch reform.

Looking more widely, a simple comparison with big pharma – still bizarrely able to bury negative drug trial results – or big food, which is able to help government design health strategies during an obesity epidemic, shows just how little impact ‘big finance’ has.

This shows how retail financial services doesn’t appear to have many allies in high places.

Yet this could be about to change. There has been some concern about how little influence advisers have, although the Association of Professional Advisers says it has scored some significant victories – including cuts to Money Advice Service fees.

But perhaps the ability of advisers to influence policy depends far more on the political climate than lobbying?

As a nation, we need more people to receive help and advice about their money and we need more people to save and invest.

Could that form the basis of an argument for lower regulatory costs, making it easier to invest than borrow and putting advisers closer to the centre of financial services policy?

Whatever their lobbying power, the answer clearly isn’t the ‘fine-a-week’ banks and won’t be for many years to come. Maybe the answer is investment advisers.

John Lappin blogs about industry issues at www.themoneydebate.co.uk