Treasury promises ‘right regulatory balance’ for small IFAs

Treasury promises ‘right regulatory balance’ for small IFAs

Harriet Baldwin, economic secretary to HM Treasury, has said the Financial Advice Market Review is addressing how to get the right regulatory balance for smaller firms.

In October this year, the Financial Conduct Authority and HM Treasury launched the Financial Advice Market Review, which was designed to explore what can be done to improve customers’ access to financial advice.

Today (1 March) in the House of Commons Ms Baldwin responded to a question from Conservative MP for North Warwickshire Craig Tracey.

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Mr Tracey asked: “Can the minister advise what steps are being taken to ensure that regulation applied to small high street financial advisers and insurance brokers is both fair and proportionate given the service they provide?”

In response, Ms Baldwin said: “We have launched something called the Financial Advice Market Review (FAMR), which will be reporting around the time of the Budget.

“We will be looking at how to make financial advice more affordable and more available, but also how to get the right regulatory balance for smaller firms.”

Richard Ross, chartered financial planner and wealth manager at Chadwick’s, said the Retail Distribution Review had been a success in terms of improving adviser skills and encouraged the evolution of stronger business models that are less dependent on opportunistic sales.

Back at the start of 2013 RDR raised qualification requirements for investment advisers and required advisers to agree remuneration with their clients.

But Mr Ross said the RDR has also made advice too expensive for large swathes of the population.

Mr Ross said: “If the FAMR takes into consideration the considerable reduction in risk that has resulted from RDR and reduces the regulatory burden to reflect this it is to be welcomed and will make universal advice provision more achievable.

“However, Harriet Baldwin’s comments seem at odds with ‘expert panel’ FAMR member Sue Lewis’s comments from two weeks ago, which suggested regulation was inherently a good thing.

“I feel this is an unhelpful starting point as it implies the review has taken this as a given. Any critical analysis of the effects of regulation will conclude that its success is at best mixed.”

He added although he was heartened by Ms Baldwin’s comments in isolation, taken as part of a wider narrative around the Financial Advice Market Review he was not expecting substantive change.

At the start of this year Tracey McDermott, acting chief executive of the FCA, told the BBC the regulator would not rule out a return for ‘some element of commission’ as part of the FAMR.

FAMR expert panel member Sue Lewis later said Ms McDermott did not mean commission was definitely back on the table for the regulator.