Emma Ann Hughes 

Why you are better value for money than the regulator

Emma Ann Hughes

Emma Ann Hughes

The Financial Conduct Authority has angered advisers by questioning if they offer enough bang for the bucks they charge.

According to a paper published alongside the watchdog’s business plan and mission statement on Tuesday (20 April), the FCA fears consumers accessing retail investments through financial advice might not get value for money.

The regulator said in retail investments relatively few advisers are transparent about their pricing before they sell advice, adding: "This does not incentivise advisers to compete on price and may result in limited pressure on them to reduce their charges."

To add insult to injury, these comments came as the regulator revealed its plan to increase regulatory fees for advisers by 4.7 per cent. 

Next week, Financial Adviser will feature a pullout supplement to mark the 30th anniversary of the newspaper.

So alongside reading the FCA’s Mission statement this week I have also been reading a lot about the changing shape of regulation over the last 30 years.

Something is generally poor value for money if you pay for it and then it fails to work when you need it to.

In 1986, we had self-regulation. That failed to stop the scandal of Equitable Life over-promising and then ultimately under-delivering and going bust.

So, then we had a shiny and new regulator from then chancellor Gordon Brown in the shape of the Financial Services Authority.

That failed to prevent the credit crunch and the likes of Bradford & Bingley and Northern Rock sliding into the abyss.

So, now we have the Financial Conduct Authority.

If the FCA prevents any other mis-selling scandals, providers going bust or dodgy deals and practices then the amount you have to pay in fees is money well spent.

They are right to flag if people are overcharging and under-delivering as this isn’t fair but if the regulator has seen examples of this practice then it should be tackling these firms not just moaning about this.

The FCA has the power to tackle shoddy practices however you do not have the power to seek your money back from past regulators who failed to do what they were paid to do.

When you find out your regulator wasn’t value for money, the depressing fact is all that happens is you have to pay for a new, more expensive watchdog that will claim it will not repeat the mistakes made by their predecessors.

emma.hughes@ft.com

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