The Association of Professional Financial Advisers has urged the chancellor to improve the accountability of the Financial Conduct authority and embed the ‘better regulation’ principles as part of his Budget next week.
An open letter to George Osborne from Apfa director general Chris Hannant asked him to enable advisers to help consumers navigate their finances by taking “significant steps” to reduce the regulatory burden.
The industry body supports the government’s ‘better regulation’ policy and believes that initiatives such as the ‘red tape challenge’ are vital for boosting business growth, particularly for small businesses which do not necessarily have in-house compliance expertise.
“It remains unclear as to why the financial services sector appears to have escaped scrutiny under the better regulation programme,” wrote Mr Hannant. “Other industries which come under the purview of an independent regulator, such as energy and water, have been part of the red tape challenge, for instance, and we fail to see why this should not be the case with the finance sector.”
Specifically, he stated that Apfa remains “very concerned” about the sheer volume of existing rules and regulations advisers have to comply with; which not only mean higher fees for consumers, but also act as a barrier to consumers engaging with their finances due to the amount of paperwork that has to be produced and completed.
“Considering the recent changes to the pensions and savings landscape, anything that discourages consumers from access to professional financial help should be of the utmost concern to the government.”
Apfa asked the chancellor to consider placing a duty on the FCA to consider economic growth and expressed surprise that the financial regulator is exempted from the scope of this duty.
“We believe that not having such a duty led the FCA’s predecessor, the FSA, to develop policies in isolation, without considering the full impact on the industry; for instance, adviser numbers have fallen by nearly 15 per cent since the implementation of the RDR,” read the statement.
It also called for a cut in existing regulation, criticising the FCA for the exponential growth of its handbook.
“Although we support the government’s ‘one in, two out’ rule, the plethora of existing regulatory stock still ranks as one of advisers’ top concerns,” Mr Hannant said, adding that the FCA should be required to include as one of its service standards, a commitment to regularly review and update its handbook.
“We would recommend an initial target of reducing the Handbook by a third in length over three years,” he added.
Apfa also demanded a performance ‘score-card’ showing how each of the requirements under the ‘regulators’ code’ should be met. This should be made accessible to external stakeholders and enable the government and industry to have a clear picture of how the FCA is meeting is obligations.
Mr Hannant concluded: “At a time when more people need to engage with financial services, as the long term care and pension reforms take effect, it is more important than ever that the regulator is not a barrier to consumers doing so.”
Earlier today the FCA published its annual report, which revealed that it received more calls from whistleblowers warning about the behaviour of financial advisers than any other part of the industry, as well as detailing that its chief executive Martin Wheatley was paid £701,000 last year.
peter.walker@ft.com
