AFM presses FCA for better understanding of mutuals

The chief executive of the Association of Financial Mutuals said, as the ramifications of RDR started to appear a year after its implementation, it was vital that the FCA worked with the industry to help consumers.

He added: “There is a recognition with the FCA that there is more work to be done; that people are disenfranchised. It is not yet clear post-RDR whether there are obvious winners and losers, but we continue to have discussions with the FCA, recognising the continued value of our members to particular markets.”

Mr Shaw warned that mutuals were treated the same as companies by government policy and regulation. He said: “It seems that they are trying to fit mutuals into a model suited for PLCs. We have been talking to the FCA about this for years. PLC logic does not always work when applied to the mutual sector.”

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He would not be drawn on developments with the Co-operative, but added: “We see the need to make mutuality meaningful so our members know why it is right for them.”

Mr Shaw added that mutuals were finding rising regulatory costs and levies increasingly burdensome, with one of the biggest concerns on compliance.

He said: “Good regulation comes at a cost. Nobody welcomes unexpected fees, such as the ones around Keydata, but we recognise that as part of a financial ecosystem, if there is a problem with a bank or an IFA firm, then it has consequences for the whole financial sector.”

IFA view

Steve Farrell, IFA for Hampshire-based Lawrence Clarke, said: “We don’t deal with many mutuals and building societies.

“That said, I agree that the FCA should not treat all companies like PLCs. However I’m not sure sure the FCA is very flexible at all. As for fees, I agree the cost of compliance is rising as we are all funding the so-called cowboys in the industry and you have to pay for everyone else’s misdemeanours.”