Greater control of non-regulated savings and investment activity will stop consumers falling prey to the unscrupulous, and encourage greater confidence in the industry, Keith Richards has said.
“The increasing danger of consumers finding their way into unregulated activity is worrying,” the PFS chief executive said. “It is now time for all activity to come under the same umbrella, to provide consistency of standards and consumer protection.”
Not understanding the difference between regulated and unregulated activities was a common problem, he said, and this exposed consumers to fraudsters and opportunists who were able to appear as though they were regulated firms or processes.
Highlighting the importance of patching up this grey area between the regulated and non-regulated, the PFS chief said it was imperative to regain public confidence in the sector so that it did not undermine the progress made following the introduction of the retail distribution review.
“It is perhaps time to undertake a broader review of regulation to ensure that it does not actually drive firms to develop non-regulated solutions to avoid regulatory cost and risk,” he said.
The government, he contended, must play its part, which would better serve the public and encourage a return to a savings culture.
He said: “Consumers logically assume that all financial and investment activity is covered by the appropriate supervision and regulation, but this is not the case.”
Warning that a ‘free’ non-advised service might at first seem cheaper when compared to regulated advice, he said hidden commissions and other charges often made it much more costly in the long term.
Last December, the society warned the public to be on guard against the inevitable wave of non-regulated players who would try to take advantage of the pension reforms.
In March, the FCA refreshed its ScamSmart campaign, aimed at preventing people from investing in “dodgy investment scams” made easier by the reforms.
At the same time, the Pension Liberation Industry Group called for an industry standard code of practice to empower pension scheme members and target unscrupulous activity.
Michelle Gibbs, financial planner at London-based Helm Godfrey, said: “Everyone needs to be under the same regulatory procedures as the consumer does need to be protected. So this is an important message that shows we are all on the same side and working in the interests of the consumer, and will help continue build trust in the industry.”