Regulation  

FCA: The first year

When the Financial Conduct Authority (FCA) came into being on April Fool’s Day last year it replaced a regulator seen by many in the industry as something of a joke.

The previous administration had been widely criticised and discredited, not least in the advice community. The Financial Services Authority (FSA) may have got a few things right, but it would always be associated with the banking crisis, misselling scandals and - for advisers in particular - the retail distribution review (RDR).

Its successor, revealingly, was quick to distance itself from the old regime, with chief executive Martin Wheatley describing the FCA as a “very different animal”. The new regulator has been a busy one, at least. Since last April it has racked up fines totalling £543 million (as shown in the timeline) and issued a succession of bans and warning notices, the latter among the new powers given to the regulator.

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It has also launched rules, guidance, reviews and consultations concerning platform charges (most notably a ban on rebates), sales incentives, annuities, crowdfunding, consumer credit, Sipps, wealth managers, insurance add-ons and more.

In other words, fears of regulatory paralysis as the winds of change swept through Canary Wharf have proved unfounded.

But has it been a successful first 12 months? While it will be some time before the FCA can be fairly assessed given the scale of the task in hand, first impressions really do count.

There appears to be a consensus among advisers on what the FCA has done well, with several remarking on its efforts to improve relations with the companies it regulates.

“From our perspective the FCA seems more open and willing to engage with the advisory community than its predecessor,” says Peter Chadborn, director at Plan Money.

“We see this from attendance at conferences and consistency of message. Certainly any dealings we have had with them at firm level have been positive so far.”

That visibility has also been evident to Alan Dick, principal of 42 Wealth Management and vice-president of the Institute of Financial Planning. He describes the FCA representatives at a recent compliance workshop as “very helpful and open”.

“If the rest of the FCA is behaving in the same way and sending out the same message then things are definitely improving,” he adds.

Damage limitation

A common complaint about the FSA was its tendency to create a compliance burden for advisers. But the new regulator has so far resisted adding to the adviser compliance load, says Mr Dick.

“I think small firms are so far down the FCA’s agenda that it is unlikely this will change. It appears (rightly) to be focusing on the places where the most damage to consumers can happen. IFAs are well down that list.”

Graeme Mitchell, managing director of Lowland Financial Planning, agrees.

“I get the impression that it is trying to be more helpful - but that’s a difficult tightrope to walk when ultimately your role is to police the industry,” he says.