OpinionDec 2 2015

Regulation is counter-productive

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In my 40-plus years in financial services, I have met many thousands of advisers; however I am yet to meet a single one who chose to enter our great profession due to a passion for compliance and regulation.

In reality, the vast majority choose to become financial advisers from a passion to help people manage their financial affairs in a more direct and personal way than in the accountancy and legal professions.

Of course, as in all walks of life, regulation and monitoring play a very important role in ensuring that the unscrupulous or reckless are weeded out and that clients are treated fairly.

Unfortunately, I feel that we have reached a situation in which the increasing weight of regulation, legislation and change is damaging the very consumers it is intended to safeguard.

We have reached a situation in which the increasing weight of regulation is damaging consumers Ken Davy

I am not alone in this view.

At the Wealth Management Association’s annual summit in November, FCA chairman John Griffith-Jones stated that the “sheer volume” of new rules heading in our direction from the EU create a “painful timeline” which “cannot be a sustainable framework for the future”.

Importantly, Mr Griffith-Jones was himself echoing the comments of his colleague, acting FCA chief executive Tracey McDermott, who at last month’s City Banquet commented that “the intensity and volume of regulatory activity over recent years is not sustainable”.

To put this into perspective, in the first quarter of this year we saw more consultation papers and guidance issued than in the whole of 2014, and since the election it has got much worse.

We have had perhaps a dozen or more further papers on major issues such as pensions reform and, of course, the Financial Advice Markets Review.

As a result not only do we have the threat of this new wave of European legislation, but also continuing reform from the ever-changing UK regulatory environment.

Is there any wonder that there is an ‘advice gap’ when, since the start of regulation, the number of advisers has collapsed from over 200,000 to about 22,000 today?

The result is that millions of consumers who benefited during the era of the ‘Man from the Pru’ and the many other advisers who over the years have provided personal financial advice across the social spectrum now find themselves deprived of advice by the very regulators who are supposed to be looking after their interests.

Ken Davy is chairman of The SimplyBiz Group