One of the speakers, a director of a new organisation that was fast making a name for itself, remarked that all their customer research indicated that while their clients in general had a very positive impression of the firm, counter-intuitively, the very best feedback came from those customers who had experienced something of a glitch with the otherwise smooth running of their accounts. The firm’s ability to take swift action and rectify problems so impressed these people that they immediately rewarded the company with loyalty. Moreover, they became their best advocates, happily recommending the firm and its services to their friends.
Over the years the FSA has grown increasingly vulnerable to criticism about its deemed errors – including a penchant for bureaucratic box-ticking, a failure to comprehend risk and to understand the practical implications of its actions. The regulator has faced numerous charges, some better informed than others, of creating confusion and complexity where simplicity and clarity should exist: money and time-wasting – both its own and that of others; poor communication internally and, even worse, externally where its quest for transparency has often burdened consumers with information overload. Certainly, it is felt the FSA has not matched up to the expectations of politicians, practitioners and the public, leaving significant scope for its successors to improve their image.
Now that 2013 has arrived the UK regulatory framework is set to change, indeed it has been well over two years since this was first mooted. This government has been consistently committed to structural regulatory change resulting in a decision to split the FSA into the Prudential Regulation Authority and the Financial Conduct Authority, each focusing on very different aspects of the industry. “Legal cutover”, as it has been named, is set to come about in April 2013, although depending on the parliamentary timetable, it could feasibly be by 1 March.
There is simply no denying the negative impact over the years of the series of mis-selling scandals in pensions, endowment, split capital trusts, payment protection insurance and others, that have so successfully undermined consumer trust and confidence. Many consider the industry to be greedy, self-serving and reluctant to alter its ways. Unfortunately we all get tarred with the same brush. The change in culture that regulators had long sought to bring about – one in which the industry genuinely places customers first – has, in too many cases, failed to emerge. There is little doubt that when the FCA does arrive, it will continue to face a huge challenge.
The premise is simple and straightforward. Consumers should be entitled to a fair deal and the FCA’s new powers will enable it to initiate prompt intervention if it discovers that organisations are failing to live up to that requirement for positive consumer outcomes. At the same time, the FCA will also become involved at the market level if it believes that competition is being adversely affected.
Suffice to say it is the intention of the new regulator to be far more proactive than the FSA.
Inevitably, much of the FCA’s workload will comprise the continuation of current regulation, but the overarching objective of the FCA will be to ensure that markets work well. Its aim is to achieve this by protecting consumers, promoting competition and enhancing the integrity of the UK financial system.
In the Bill that defines the FCA’s remit, the term “consumer” is written with a broad brush. It is equally applicable to the man in the street wanting to set up a basic bank account as it is to one regulated financial firm doing highly complex business with another. Unsurprisingly though, not all consumers will be treated the same way as this will be determined by their level of expertise and financial sophistication.
Part of any trade association’s role is to ensure that the views of the industry are clearly expressed and implemented in a way that can make a practical, meaningful and positive difference to the consumer. By concentrating our efforts on achieving industry-deliverable solutions for the end consumer, we can maintain an informed dialogue with government policymakers and regulators alike. Positive outcomes are the way to restore confidence.
Tony Vine-Lott is director-general of Tisa
Key points
The very best feedback comes from customers who have experienced something of a glitch with the otherwise smooth running of their accounts.
Now that 2013 has arrived the UK regulatory framework is set to change.
The overarching objective of the Financial Conduct Authority will be to ensure that markets work well.
