Opinion  

Regulators must read this... and act

Ashley Wassall

One of the stories published on FTAdviser this week should be put under the nose of every person of influence at the regulator. It should be required reading for senior figures in the Treasury and elsewhere across our newly elected government.

Three in 10 financial advisers could be set to leave the profession within five years, according to a recent study. Most of these, around a quarter in total, say they will leave within two years.

At a time when the industry - and, frankly, society - is getting to grips with unprecedented new freedoms in pension access that have the potential to leave retirees destitute (remember, those who take cash lose entitlement to state benefits), this should set alarm bells ringing.

I sat at a dinner last year listening to John Griffith-Jones, chairman of the Financial Conduct Authority, wax lyrical about the importance of professional advice in this brave new world.

Hell, the government and FCA have made it a requirement to seek advice to transfer final salary or other ‘safeguarded’ schemes to take advantage of the rules.

We have also seen ‘project innovate’ and other work designed to help close the perceived ‘advice gap’ - another phrase often used by politicians and regulators promising action to ensure ordinary people have access to expert support.

The simple truth is that good intentions and supportive tinkering are not enough to stem the tide of an ageing profession facing ever greater burdens and in which morale, at least judging by a highly vocal minority, is at rock bottom.

Indeed, while the article referred to looming and long-signalled changes affecting legacy commissions, the comments underneath tell their own story about the real concerns we hear from adviser contacts day in and day out.

One said of their 18-year old, straight-As daughter’s intimations that she would like to join the family business: “I would be failing her as a parent to pass on this most putrid of poisoned chalices in this regulatory environment that only penalises the good people... I could not look her in the eye if I had lumbered her with the sorts of regulatory fees I have stumped up in the last few weeks.”

Another of the younger advisers (age 36) wrote simply: “Maybe the older ones need to think before they speak, as I’ve found it’s not the most accommodating industry to new blood. In fact I’d suggest anyone with any option for something else did something else. I’m stuck now.”

The fees issue is shameful. FSCS levies, paid for in the main by good, honest firms to cover losses from failures related to dodgy unregulated investments they would never touch, have soared to a combined £216m this year.

Pensions advisers in particular were hit with a £100m maximum levy for the coming year, three times more than they were billed last year and coming on top of an interim bill for £20m in March.