The regulator must adopt a rigorous approach to better regulation to reduce costs for firms - and consequently the price the consumer pays - without lowering the protections given, according to the Association of Professional Financial Advisers.
The plea was part of the industry body’s manifesto for financial advice, published today (23 March) ahead of the general election at the start of May.
It calls on the Financial Conduct Authority to:
• cut reporting requirements which take up a considerable amount of a firm’s time and resources;
• freeze its budgets in nominal terms for three years;
• simplify the handbook by reducing its length by a third over three years; and
• create a fair time limit on when claims can be made to the ombudsman to provide greater certainty for investment in the profession.
It also suggested a change in the FCA’s approach, arguing that too often the reaction to a given problem has been the addition of more rules.
“However, we believe that in most cases the existing rulebook was sufficient and we therefore ask the FCA to focus on the supervision and enforcement of fewer rules with an emphasis on consistency and full implementation,” read the document.
The manifesto suggested that the government assists with this by applying better regulation principles to the FCA, with the City watchdog having to report on progress annually to parliament.
Apfa’s Chris Hannant spoke to FTAdviser about cutting the FCA’s rule book in September 2014, when he said that at present, if printed the FCA handbook would stack up to eight foot worth of A4 sheets.
It also called on whichever government is returned after 7 May to ensure a stable policy environment for pensions, develop a savings strategy, and focus on effective implementation of a financial capability strategy.
The document mentioned Apfa’s cost of regulation report, which found that the entire financial advice sector spent almost half a billion pounds on regulation in 2013, with each client in the UK therefore paying an estimated £170 a year towards the cost of regulation.
The key concerns for members were reporting requirements and regulatory fees, along with understanding the handbook and the capital adequacy requirements.
Research conducted by NMG Consulting on behalf of Apfa last month showed that different regulatory costs (58 per cent) and low awareness of the value of financial advice (25 per cent) were the biggest issues affecting their business today.
According to Apfa, underpinning all these actions should be a set of principles, including that advice should be accessible at a ‘reasonable’ cost and that guidance is a ‘poor substitute’ for full advice.
Chris Hannant, director general of Apfa, commented: “Over recent years, we’ve seen an advice gap widen, with the numbers of advisers falling and cost of financial advice rising, putting it out of the reach of many.
“Closing this advice gap must be the number one priority for the profession.”