It's not often I find myself agreeing with Paul Lewis from Radio 4s Money Box. Some of his opinions on the advice sector have been less than complimentary, however this week I am going to agree with him.
He wrote an article last week in Money Marketing titled Paul Lewis: Unfair FSCS (Financial Services Compensation Scheme) levy punishes good advisers.
My favourite part is as follows
“In 2014/15 the headline figure was £1,420,000,000. Yep. To regulate firms, help those who have been mistreated by regulated firms and compensate the worst cases cost more than £1.4bn. And that is without the Money Advice Service and Pension Wise. The FCA costs more than the National Crime Agency – and they deal with criminals. It costs less to run the Serious Fraud Office than the FSCS.”
One of the things that we find most galling is that £533m of that £1.4bn is spent regulating firms and individuals to prevent malpractice.
When this doesn’t work us good guys are left to pay the same again for the regulators failings!
Unfortunately when fines are levied, some £2.5bn since 2013, it is snapped up by the chancellor and used to pay for other unrelated items in the economy.
Surely a small portion of that, perhaps £300/£400m could have been used to fund the FSCS?
Interesting stuff I hear you say!
Then the government decides to announced that it is launching a major review of financial advice!
The review, published this week, will be led by the Treasury and the FCA and will look at how the advice market can deliver better outcomes for consumers. Final proposals are expected ahead of next year’s Budget.
Some of you may remember the last review titled the Retail Distribution Review (RDR), which was implemented a mere 36 months ago.
It would appear this did not do the job and in fact has contributed to the now large advice gap and an unsustainable regulatory funding model.
This is a golden opportunity for them to get things right? Again!
We will, along with other firms and organisations, lobby the government during this period to bring some real accountability to the FCA and design a fairer funding model and regulation that actually protects consumers.
We love what we do here at Murphy Wealth and we work hard to ensure our advice and management processes are above and beyond the regulations so we can just focus on delivering for our clients, but we are not insulated from the problems of the wider industry.
We would be delighted to get your comments as consumers of financial services and so we can add your voice to the debate.