Last week, Financial Adviser asked the FCA to respond to The Heath Report 2. The response? “We do not recognise the picture presented”.
On 9 September, Martin Wheatley was questioned by the Treasury select committee member Steve Baker MP. In particular, he was asked about adviser losses using the statistics from THR1. Wheatley replied: “I do not recognise those figures”. Rather odd that – not least because the prime source of those numbers was the FCA itself and an interview given by, er, Martin Wheatley.
In March last year, I joined the Panacea team for a meeting with the FCA to discuss the effect the removal of trail commission would have on the IFA community. Panacea had run a survey responded to by more than 50 per cent of the IFA firms that had declared that 94 per cent looked upon the loss of trail as “catastrophic” to their futures. This was dismissed as “unimportant” by the FCA.
It is very difficult to create a debate on “the battlefield of ideas” if the regulator cannot even recognise its own statistics or countenance that those with decades of sector experience may have a worthwhile view.
It is the manifestation of a bigger issue. Westminster is now run by ex spads (special advisers). They view themselves as the ranchers and the public their cattle. They leave Oxbridge with their philosophy, politics and economics degrees and see themselves as the greatest thinkers of the age and the sole repositories of wisdom
Their guru is a US left-wing law professor called Cass Sunstein who believes that people are likely to do stupid things unless they are nudged to do the right thing. David Cameron is a fan.
There is a major flaw in this approach. It presumes that those nudging have the necessary wisdom to be right. However, this self-selecting cabal has never lived in the real world or ever delivered anything practical. No wonder then that they have grand policies that fail to deliver the expected results.
The FCA believes in behavioural economics which leans heavily on Sunstein theory. Again, the ideas of a “wise” self-selecting elite must be pursued to the exclusion of any other view which remains “unrecognised”.
It is time for the FCA to be judged by the court of public opinion – which will recognise a mess when they see it.
Garry Heath is editor of the Heath Report