The FCA must recognise that innovation will be “practically impossible” in as tight a regulatory regime as currently exists, Lord Deben has warned.
Speaking at the Association of Professional Financial Advisers gala dinner in London, Lord Deben, chairman of the trade body, welcomed the keynote speaker, John Griffith-Jones, chairman of the FCA, by offering “four areas of encouragement”.
For Lord Deben’s first encouragement, he said: “We would encourage you to be genuinely accountable.” He said only by the FCA showing itself to be transparent and open in all its dealings, and to be accountable to Parliament, could the industry trust the FCA.
Lord Deben also urged that when pension freedoms come in, the public should be signposted to proper, paid-for, independent financial advice. At the moment, he said: “There are fewer people advising fewer people, and those who are getting advice are at the top end of the wealth chain.”
His third encouragement was to keep at arm’s length: “I look to the FCA for light touch regulation. Regulation should be seen as an ally of good practice.” He said that the financial services industry is currently more heavily regulated than other service industries such as power or telecoms, and continues to see “regulation after regulation”, which is stifling innovation.
This led to Lord Deben’s fourth piece of advice, that the FCA should “recognise that innovation will be practically impossible in such a regime. Innovation in the UK is crucial, and if you regulate this out of the system, you will destroy one of Britain’s most innovative industries.”
Nick McBreen, financial planner for Truro-based Worldwide Financial Planning, said: “Any business environment where innovation is stifled is not being healthy, but I am not surprised in this regime that innovation has taken a back seat. We are going through constant change so people are not thinking about innovation but the priorities: maintaining business, risk management, damage mitigation.
“This is making people very focused on those areas. The only area where innovation is being seen is in the auto-enrolment space, where there is something simple being created. I welcome that, and people like Nutmeg who are trying to demystify the investor journey. But the main show in town is keeping business healthy under constantly increasing regulatory pressure.”