In September, the Financial Conduct Authority issued a call for input on some critically important matters for the future of the financial advice sector.
In particular, it wants to know how crooked, reckless and careless advisers can be made more accountable for their actions. In simple terms, making the polluters pay.
The FCA’s objective is to create a fairer and less costly compensation scheme burden – but are you listening? What have you done about it?
Responses must be in by the deadline of December 15. Have you responded yet?
This is your opportunity to help the FCA protect consumers and advisers by making it harder for the small number of dishonest and reckless advisers to prosper at our expense.
We all share the FCA’s objective of creating a fairer and less costly Financial Services Compensation Scheme.
The first major step to personal accountability has already been taken through the introduction of the Senior Managers and Certification Regime.
If this is properly followed through by the regulator, it should ensure that an adviser who acts criminally or recklessly is personally liable for their actions.
A company is an inanimate object; it is invariably individuals within it who do wrong.
An unfair system
The FCA must ensure those who give criminal or reckless advice are pursued, significantly reducing the cost of the FSCS while improving the availability and cost of professional indemnity insurance.
Unfortunately, the reality is that making the ‘polluter’ pay is impossible beyond the personal responsibilities that will stem from the SMCR, therefore any solution is going to be unfair.
However, the present FSCS funding model is so grossly unfair as to be obscene. It puts the greatest burden on those least able to afford it and who have no way whatsoever of stopping the polluters.
The FCA needs to look at the billions in fees charged by the institutions on funds under management, where even the tiniest of levies would readily cover the FSCS.
This would also incentivise them to pay greater attention to their quality of business and to use their extensive market intelligence to dramatically reduce the damage a crooked adviser could do by helping to catch them quicker.
Together, these steps would help further improve consumer outcomes, reduce the cost of the FSCS and PII and put the residual cost of funding the FSCS on a fair and stable basis. This is your chance to influence the FCA. Opportunity is knocking – make sure you are in.
Ken Davy is chairman of SimplyBiz Group