Regulation and Politics
Surely the FSA board was responsible for its own agenda
Tuesday, January 24th, 2012

Of 61 things brought to the FSA board’s attention in 2006 and 2007, only one involved banking supervision. As Sir David Walker told the Treasury select committee this morning, the other matters involved Treating Customers Fairly, Equitable Life, pensions misselling and other conduct issues.

But isn’t that the board’s fault? It is their organisation, it should be their agenda,  and they were repeatedly told by me, among many, many others, that they were in serious danger of neglecting big institutions  in their obsession with small ones. At a minimum, a very minimum, they should have examined lending practices and securitisation.

They needed to address issues about conduct of course particularly when it involved cleaning up after pension misselling and Equitable.

But this reads like they were ‘fighting the last war’ and any organisation worth its salt should know not to do that alone. Meanwhile what was the wholesale division up to in the midst of this – saying things were all tickety boo?

Walker thinks this exonerates the board from a lot of the blame for the banking disaster. No it does not.

 

 

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‘Customer agreeing’ legacy business may be the only way to completely proof your business
Monday, January 23rd, 2012

The Money Debate got a little bit behind the news last week but thinks this is still worthy of comment.  Aegon’s lead on regulation Steven Cameron is worried that trail commission may be switched off post RDR if there is a fund switch within a bond or individual pension wrapper i.e. the stopping of trail would not just apply to increments, but to any new advice surrounding a switch.

Increasingly it strikes me that advisers who want to be 100 per cent sure they will not lose income in some of the more puzzling provisions within the RDR need to consider moving the whole of their back books on to an adviser charged basis.

This is certainly not that easy to do and could prove to be another massive financial headache at just the wrong time, as advisers are trying to meet the other requirements.

However it would mean that the charging model, if not quite air tight would at least be water tight, against further FSA and FCA actions.

It also suggests that someone setting up an IFA from scratch, providing they have enough cash to fund the first couple of years, is probably in a much better position that an adviser with legacy of almost any kind, even legacy based on a relatively flat and what was once a quite forward thinking charging structure.

For established firms, I accept that adviser charging, or customer agreeing the whole back book may be easier said than done. And as I predicted several years ago, I wouldn’t be surprised to see an FSA/FCA paper some time in future that worries about the fact that certain classes of business are not being switched enough.

 

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Stephen Gay quitting Aifa – a few points
Friday, January 13th, 2012

The Money Debate can keep this short and sweet and give its view in three points.

1) Stephen Gay should really have stayed at Aifa at least until the RDR deadline.

2) The ABI really should not have poached or hired (or whatever they want to call it) the boss of Aifa at this point in the process (even if it is the football transfer window).

3) The Money Debate humbly submits that someone within the organisation should step up and take the role in an acting capacity until at least year end – i.e. if at all possible Rob Sinclair. Or are we going to muck about for the next six months instead?

 

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