Advisers have turned to their trade body and expressed doubts over the effectiveness of the City watchdog, according to Pimfa’s Ian Cornwall.
Mr Cornwall, director of regulation at adviser trade body Pimfa, said the feedback he was getting from members was contact with the Financial Conduct Authority had prompted them to question the regulator's effectiveness.
He was discussing the latest rise in the compensation scheme levy with adviser Tim Harvey, director at HR Independent, on the FTAdviser podcast.
Earlier this year the Financial Services Compensation Scheme said it would increase the levy on the industry by almost 16 per cent year-on-year, landing a total bill of £635m on advisers and providers for 2020-21.
It was the latest increase in a string of levy rises which have hit advisers’ pockets.
Mr Cornwall said: “If you look at some of the feedback from the complaints commissioner and the London Capital Finance enquiry — as well as firms’ own experience on day-to-day contact with the FCA — the feedback we’re getting is on whether the FCA is operating an effective supervisory regime.”
Mr Harvey agreed the levy rise “absolutely” raised questions about the effectiveness of the FCA’s regulation.
He said: “At the moment, apart from the reputational damage which occurs when someone loses money, there’s little motivation for [the FCA] to change as it’s other people’s money.”
The FCA has been approached for comment.
Mr Cornwall and Mr Harvey also discussed the possibility of a product levy. Backing a change to the current set-up, Mr Harvey said: “If you look at my business, in the main, we just do boring stuff.
“The likelihood of me having a claim for an Isa portfolio is very low indeed, whereas if I was investing or encouraging my clients to invest in something non-mainstream then there’s a different sort of risk.”
Mr Cornwall agreed. He said: “Most financial planners buy quality products and financial instruments and quite rightly they are very aggrieved they pick up the tab for people whose investments are borderline fraud.
“The vast majority of advisers won’t and never have touched them with a bargepole.”
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