At the FCA’s annual public meeting on Tuesday (18 July) you got the sense of the difficult high wire act the regulator has to walk on a daily basis in the current political and economic climate.
It is a tightrope they have struggled to walk since then chancellor George Osborne threw open the Pandora’s Box that is pension freedoms and made people view pensions – and providers – as a trap for cash they want to get their hands on.
The watchdog is tasked with protecting consumers. Ultimately this means wrapping them in cotton wool so they have a comfortable rather than an impoverished retirement.
In the case of at-retirement advice really this means making sure they are pushed towards an annuity for many people – the very requirement Mr Osborne threw on the fire when he ripped up the pension rule book and granted greater choice.
In the case of pre-retirement advice, in order to meet their consumer protection objective the regulator would naturally err towards encouraging people not to give up a defined benefit scheme with guarantees.
But in the current economic climate and post-pension freedoms, massive transfer values are on offer.
To pull cash out of an ailing final salary scheme and take on a defined contribution scheme that would allow you to instead chase greater returns plus be able to dip in and pull out cash makes sense for some.
The coalition government created a tax regime that claims to offer more “freedom and choice” over what you can do with your pension pot but ultimately this has resulted in more confusion and the risk of ignorant savers blowing what they do have.
Ultimately, the biggest headache for the FCA is clearly what is being churned out of Westminster at the moment.
The regulator is still unpicking and trying to make sure pension freedoms doesn’t result in some future scandal and yet at the annual public meeting, the regulator was frequently quizzed on what Brexit means for them.
Navigating Brexit and updating their rulebook will no doubt create similar challenges for the FCA as pension freedoms has done.
I am sure the government will try to strike a deal that makes the UK appealing for financial services giants to stay put.
Back in May the Organisation for Economic Co-operation and Development stated European Union nations have “ample room” to keep trading in financial services with the UK after Brexit even within the current international rules.
The OECD stated there is no need to build any barriers between the continent and its finance hub as shutting out Britain would risk starving the EU of the capital vital to its economy and break up the valuable City of London.
Ultimately, the UK government needs London to remain one of the financial services capital cities of the world but the FCA faces having to make sure this doesn’t come at a cost of letting standards slip.
I must admit, aside from the hefty pay packet, being a regulator at the moment seems trickier than ever.
You can soon no longer blame Brussels for tying your hands and your employer – the UK government – keeps on doing things in a bid to please big business and voters that goes against what you have been tasked with doing.
emma.hughes@ft.com
