Then we had FAMR and then robo-advice was the new fashion. That hasn’t replaced advice either.
What price guidance? Public policy should go back to encouraging advice.
Secondly, the regulator’s power is derived from three nebulous objectives in FSMA 2000. What it missed was an objective that forced the regulator "to encourage consumers to invest and protect themselves”.
The current objectives allow the regulator to load ever more duties and costs on the regulated without regard to how it affects the consumer - witness 16m to 5m in eight years.
We do not need to wait for a change in the Act; we just need the board of the FCA to make it one of their aims in their annual plan and then ensure it is delivered.
We need to address the barriers to entry. The way FOS operates is not only a judicial disgrace but is a major disincentive to investment in the advice sector.
It must return to common law principles otherwise advisers will not have PI insurance. How are we going to recruit new advisers if they know that after a career in the profession, a whim from FOS can take away their house?
The FCA needs to police the industry. There are a number of times the regulator has the information but fails to act quickly. A cynic might suggest that some scandals are allowed to fester until they become newsworthy.
Finally, we need to sort out capital adequacy. No other profession is judged by this measure. It restricts the development capital available and stops firms restructuring. It must go.
So, the new Heath Report has identified that advisers are still dropping clients and that forthcoming retirements will treble exiting advisers.
Alternatives to proper advice have failed and we need to revive its fortunes.
Recruit new advisers, remove the barriers to entry and make the regulator adopt a new objective - namely, "to encourage consumers to invest and protect themselves”.
Hard copies are available to non-members from thr3@libertatem.org.uk
Garry Heath is director general of Libertatem
