Last year, for the second time in my career, I stepped away from giving regulated advice to clients. It’s been a few years coming; spending more time working on my other business, a financial services marketing agency, means less time for building and maintaining financial plans for clients. I’m fortunate to have a group of excellent colleagues who can more than fill my shoes.
We draw so much of our identity from our careers that it’s only natural to feel a little melancholic at the loss of one job title. Despite continuing to have day-to-day involvement in the business, with responsibility for investment research, marketing and client communications, and (joy of joys) regulatory reporting, the ability to advise members of the public is a special honour.
Weirdly, my stepping back from the provision of regulated advice coincided nicely with the introduction of the SMCR. One consequence of this regulation is that, on the Financial Services Register at least, the FCA lists me as an approved person, but not my non-senior manager colleagues. They are, apparently, of a status where “Regulatory approval no longer required”.
FCA Register changes draw concern from advisers
What a consumer must think about this is anyone’s guess. Here’s me, a chartered financial planner who doesn’t give financial advice, listed on the official FCA register as ‘Active’, while my colleagues who do provide financial advice are shown with a bewildering regulatory description alongside their names.
At worst, it’s a green light for scammers to rip off great swathes of vulnerable consumers. The genius at the FCA who decided this approach was anything approaching a sensible idea needs their head examining.
Profile: ‘For a small firm we have a big presence’
Perhaps with a new government in power, and Brexit assured for the end January, we might see a more measured approach to regulation in the future. I live in hope. Depending on the trade deals struck, and regulatory alignment required, it’s nice to think that future changes to the rulebook could place common sense and consumer protection ahead of eurocratic-inspired regulatory fluff.
We might even see Boris Johnson’s top aide, Dominic Cummings, turn his attention to the FCA, after he tackles what he perceives as billions of wasted spend in defence procurement. But FCA spending is less critical to government mandarins than areas like defence or the NHS. It’s less important to be frugal when it’s not taxpayer money at stake, but levies on regulated firms.
Martin Bamford: A wake-up call for financial planners
There’s a matter of scale too. NHS spending is expected to be around £134bn in 2019/20. The FCA has an annual budget of approximately £600m, to which of course we should add a further £532m for the FSCS to pay for failed regulation. And another £46m interim levy to pay for rising pension claims. And a further £332m for the FOS, to arbitrate on disputes between disgruntled customers and regulated firms.
My maths makes that £1.5bn plus change. Sure, nowhere near the scale of the NHS budget or the amount spent on defence procurement, but a sizeable sum nevertheless. This money is not taxpayer money, but money paid by advisers, insurers and banks, and therefore money paid by customers of regulated firms.
Much like the Treasury, we don’t have any of our own money in the financial services sector. We have the charges paid by our clients and customers, and they continue to indirectly suffer the consequences of flawed financial services regulation.
Martin Bamford is chief executive at Bamford Media
A very good article Martyn.