Regulation  

FCA revolution and over-priced advice: the week in news

FCA revolution and over-priced advice: the week in news

With the US presidential election at the beginning and chancellor Philip Hammond's inaugural Autumn Statement at the end, November promises to be thick with financial news.

By contrast, the final full week of October felt distinctly quiet.

The FCA was making headlines again, as were the Waspi women - this time for the right reasons - while True Potential's Daniel Harrison ruffled a few feathers with the claim that some financial advisers may be charging their clients more than they ought to...

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1) FCA hints at "radically different" future

The financial watchdog's recently-appointed chief executive Andrew Bailey pulled no punches at the launch of a paper on the FCA's "mission" this week.

He said a "radically different" approach was needed to the regulation of financial services to move it away from the "sorry history" of mis-selling scandals, financial crises, and rate rigging.

“The future needs to be radically different from the past. We owe this to the public who are the consumers of financial services,” he said.

The consultation paper included  questions on protecting consumers, such as what is the right level of consumer protection in an environment where they are increasingly expected to take responsibility for their own financial decisions, and how the FCA should balance the responsibilities of firms and consumers.

It also asked whether the FCA should prioritise the protection of vulnerable consumers, and if so how.

2) Next financial crash, here we come!

On the subject of regulation, a report released this week by think tank New City Agenda made for uncomfortable reading for the UK's financial regulators.

It accused the financial services industry of being stuck in a “regulatory spin cycle” and urged regulators to consider systemic reform, rather than simply making stricter regulations to protect the existing system.

The authors of the report, entitled "Cultural change in the FCA, PRA and Bank of England", said in the wake of crises, politicians tend to "respond to public outrage by introducing new legislation and more detailed regulation". 

"However this new regulation is progressively watered down, not sufficiently enforced or repealed. This lays the foundations for the next crisis.”

The report singled out the FCA as having "a more fragmented approach” than other regulators.

Referring to recent changes at the FCA, the report said: "It made changes to hiring, training and remuneration systems but was not clear on what it was trying to achieve or how progress should be measured.”

3) Advisers may be ripping off their clients, claims True Potential

One of our most read stories of the week was the claim, from True Potential senior partner Daniel Harrison, that financial advisers are not such fantastic value as they may like to think.

Mr Harrison said: "As a rule of thumb advice in the market always seems to add up to about 2 per cent.

“I don’t mind that too much if it is fair, but I don’t see it being particularly fair all the time."