FEIFA Chief Executive / FECIF Secretary General
Making regulation more effective and accountable
The month of May saw the launch of a new trade association in the UK, as highlighted in last month’s editorial. It seems to me that its aims and concerns are highly important elsewhere in the EU.
Libertatem (which is Latin for Liberty or Independence) was formed for a number of reasons, which are understandably UK-focused, but the key ones are very relevant for all European markets.
Commission bans - the UK advisory sector is still relatively large but faces some serious challenges, some of which have been created by the latter stages of RDR (the major regulatory changes that came into force in January 2013). Adviser numbers have already dropped by 12% since RDR was introduced but there are serious concerns that the loss of past trail commission – which is scheduled to occur in April next year - will reduce adviser numbers by another 22%, at least. This is perhaps a situation that other European regulators should strongly consider, when assessing the possible effects of a commission ban in their respective countries?
Deregulation - there is arguably an excellent opportunity to make regulation far more accountable in the UK, now that there is a majority Conservative government, which offered the voter considerable deregulation ahead of the last election. There is a need to ensure that the election rhetoric is converted into action. In addition, the Enterprise Bill was launched in the Queen’s Speech with the main purpose of cutting red tape for businesses and encouraging a more prosperous deregulated environment. In Europe we have the REFIT initiative; we all need to ensure that we are heavily engaged with this to turn words into action.
Rising regulatory costs - Libertatem’s Director General, Garry Heath, believes that unless the UK sector creates a trade association that is willing to push back and promote independence/advice, adviser numbers will continue to drop whilst regulatory costs, which have increased four-fold, will be shared amongst a decreasing number of advisers. This could lead to a spiral of decline in which the fixed costs of regulation and compensation are chargeable to a much smaller number of firms. Increased regulatory costs are heading the way of all EU countries – if adviser and intermediary numbers face a similar experience to the UK then those companies that welcome the changes may need to reconsider if the costs of doing business in the future may make it impossible for them to operate!
Consumer protection - Libertatem is determined that impartial advice is available to the widest number of our citizens as possible and that the industry offers trusted solutions which allow the populace independence from state welfare. If regulation results in protecting a smaller number of people – because it excludes an increasing number of the populace from accessing financial advice – surely that is a failure; not least as it is the masses that are often the ones that need sensible protection.