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APFA calls for regulatory dividend

Robyn Hall

September 25, 2013

The dividend includes a number of steps APFA believes the Financial Conduct Authority should take in order to reflect the new financial advice sector post-RDR, to reduce the regulatory burden on advisers and boost the vitality of the industry both now and in the future.

APFA has written to Martin Wheatley, chief executive of the FCA, outlining the steps they want to see the FCA take as part of the dividend.

At a recent Treasury Select Committee meeting, Wheatley admitted concern about the availability of advice to consumers post-RDR, and acknowledged the issue needed addressing.

Chris Hannant, director general at APFA, said: “The aim of the RDR was to improve the delivery of investment advice for consumers.

“Higher professional standards now, and the elimination of commission bias, will reduce the risks that consumers face.

“For a risk based regulator like the FCA, reduced risk should entail reduced supervisory effort. In turn, this should mean lower costs – which we want to see passed on to advisers.

“In this new landscape, it needs to be easier for advisers to run their businesses and look after clients.

“This is not about lowering standards. This is about creating a vibrant environment where firms can grow, develop talent and encourage more young people to join the profession to provide the advisers of the future. It’s also about creating a sector which can look after consumers.

“There are a number of steps we think the FCA can take to reduce the regulatory burden on advisers, both directly, in terms of fees, and indirectly, in terms of supervision and compliance.

“We’ve set these out very clearly to the regulator, and we will be producing a regular flow of evidence so we can hold them to account on each one.”

APFA has outlined five initial steps it believes the FCA could take to help reduce the regulatory burden on adviser firms:

Reporting requirements – APFA wants the FCA to streamline the data it collects from advisers, and increase the time for reporting from six weeks to three months.

Consumer credit – The FCA takes over responsibility for consumer credit in 2014, and APFA is calling on the FCA to ensure their regulatory approach reflects the different types of risk different firms present, rather than a ‘one size fits all’ strategy.

Longstop – The then-FSA gave a commitment to Parliament that the FCA would consider whether to investigate the case for a longstop as part of its business planning for 2014/15. APFA is calling on the FCA to make good on this commitment and to look again at the issue of a longstop for advisers.

FSCS threshold for investment intermediaries – APFA believes the case for increasing the FSCS threshold needs revisiting in light of the fall in adviser numbers.

Fees – APFA believes that following the RDR, the reduced risks to consumers means that less regulatory resource is needed to supervise advice firms and this should be reflected in the costs the FCA allocates to advisers in order to reduce their share of the bill.

APFA is also calling for is a period of stability for firms. Following the RDR, many advisers are still refining their business propositions and APFA believes a period of regulatory certainty is vital if advisers are going to adapt successfully. As such, APFA is asking the FCA to commit to a moratorium on major policy initiatives that affect the advice sector until 2015.


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