Justice and fairness essential for good regulation

Gill Cardy

“By all means keep challenging us on the volume of requests but do not lose sight of the value of good data as a precursor to better regulation.”

Dear Mr Griffith-Jones, chairman designate of the FCA (and author of the above quote),

Thank you for your recent comments on the question of data provision by firms. You well know, from repeated and consistent iterations of the Practitioner Panel surveys, that smaller firms find the regulatory burden in general to be overwhelming.

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Indeed I argue that the burden is not merely overwhelming but counter-productive. Any regulator depends in large part on the good nature of the regulated in order to achieve its objectives. An overriding sense of justice and fairness goes a long way towards ensuring the community supports the regulator.

In contrast, the goodwill lost when a firm receives emails threatening the full force of regulatory retribution, simply because rounding meant that two totals differed by a few pounds, is immeasurable. The goodwill lost when firms spend days collecting data to demonstrate compliance with your capital requirements, only to find that others seem to be able to operate without meeting their own capital requirements is immeasurable.

I have sat in many meetings and heard all the usual assurances (platitudes?) that this data is not only necessary but useful. But, sir, for good data to be a precursor to good regulation, the regulator must know the reason for which it is collecting the data and what it will do with what it finds. The computers and the staff who read and interpret the data must have useful and sensible parameters within which to measure the information they receive. They must know the implications of the information received and an understanding of the firms to which the data applies.

From our side of the retail mediation activities return we do our best to provide you with good data. We would like you to do your best to provide the good regulation you promise.

You have spent the past six years working towards increasing the quality of advice and professionalism of the advice community.

Advisers acknowledge the regulator’s desire for robust regulation, and understand that the benefits of good regulation feed through to all market participants.

But all forms of regulatory cost, including time taken helping you meet your objectives, eventually pass through to our clients, whose protection is your statutory obligation. I therefore request a little bit of pragmatism on your part when you reconsider your data and other regulatory requirements.

Gill Cardy is managing director of IFA Centre