In the week that Liverpool experienced higher lockdown levels and Jon Courtenay won Britain’s Got Talent, more advisers received letters from the Treasury via their MPs.
Advisers who had written to their constituency MPs during September as part of the Keep Fees Fair campaign have been contacted by their representatives in Westminster.
The letters have indicated a more receptive tone at HM Treasury and elsewhere in parliament-land for a more effective – and more cost-efficient – regulated environment.
However, the same sticking-point over the independence of the Financial Conduct Authority, and of the professional indemnity insurance market, remains a key theme.
One adviser, Heather Dunne, said she was “disappointed” HM Treasury had not picked up on the wider issues she raised about regulation, but honed in on the issues surrounding PII cover.
In the letter from John Glen, on behalf of the Treasury, to Ms Dunne’s representative, Tom Tugendhat, MP for Tonbridge and Malling, Mr Glen acknowledged the problems with PII cover but said: “The FCA argue that it is for individual PII firms to decide whether they wish to provide this cover to financial advisers, and if they do, at what risk-based cost.”
In this case, therefore, the problems facing advisers over PII hikes are not a matter for government or for the FCA.
However, there is hope that the message is getting through to the policymakers that this is just one symptom of a broken regulatory system.
In his letter, seen by FTAdviser, Mr Glen continued: “HM Treasury is aware of the challenges facing the industry regarding PII and is working closely with the FCA, who collect comprehensive information about regulated firms’ PII cover, to monitor this situation and ensure the availability of advice services is not threatened.
“HM Treasury continues to engage with a range of stakeholders on this issue, including the Personal Finance Society.”
With the continued pressure from stakeholders such as the PFS, as well as individual advisers and their MPs, the Treasury has acknowledged there is a “challenge” facing the industry regarding PII.
Mr Glen also acknowledged what advisers have claimed – that the “availability of advice services” are “threatened” by ever-rising regulatory levies and hikes in PI cover.
The campaign continues; Karl Pemberton, managing director of Active Financial Planners, wrote to Mel Stride, chairman of the Treasury Committee.
Although Mr Pemberton stated Active was hit by a 70 per cent increase in its fees this year, his letter went further, suggesting fees should be addressed as part of a wider review of FCA policies and practices.
He called for:
- A review of the FCA whistleblowing policy. Earlier detection of unethical behaviour will reduce the number of financial advice companies whose liabilities pass to the Financial Services Compensation Scheme;
- Introducing a mechanism by which fee increases are capped. Consumers benefit from diversity of operators, and capping fee increases would keep smaller players in the market and allow all operators to plan ahead with greater certainty;
- A mechanism by which directors of disgraced companies are barred from practice;
- A mandatory cooling-off period for customers when a company creates a new entity (to tackle phoenixing).
He added: “Without a vibrant, stable and sustainable market, consumers will be left poorly served, more vulnerable to scams, and more likely to withdraw their funds. I would welcome the opportunity to discuss these issues with you and would be pleased to contribute to a review of FCA governance.”
With positive communication from the PFS and other trade bodies in their talks with the FCA and the Treasury, as well as an ongoing review into the regulation of UK financial services, now is an opportune time for advisers to press these points home to MPs.