The UK’s Financial Services Authority is defending its plans to reform regulation in the retail investment business.
In a letter to the chair of the Commons Treasury Committee, FSA chief executive Hector Sants defends the regulator’s plan to reform retail regulation, including its plans to increase advisor proficiency requirements, do away with embedded commissions, and require firms to have enough capital to resolve complaints.
The letter indicates that advisors have been lobbying the government and various MPs expressing concern about the possible impact of the proposed changes. However, the FSA is resisting any effort to water down the reforms. “Any dilution of the proposals will result in an increase in the cost to consumers through continued mis-selling,” it warns.
The FSA estimates the sale of unsuitable products costs between £400 million and £600 million in consumer detriment annually. And, it says that high incidence of mis-selling is due to “fundamental flaws” in the market. It hopes to address these flaws with both policy changes, and more intensive supervision.
“We believe all these reforms are necessary in order to equip retail investment advisers to deal with the challenges they now face and to remove distortions in the way the market has operated in the past. This will provide better protection for consumers and better outcomes for consumers,” it says.
“Despite the vocal concerns of some in the [independent advisor] community, we believe [the reforms are] absolutely fundamental to address the root causes of numerous problems we have observed in this sector and to improve consumer outcomes,” it concludes. The FSA says that it remains committed to implementing the reforms by the end of 2012.
IE
UK regulator committed to financial advice reform, FSA chief says
- By: James Langton
- December 16, 2010 December 14, 2017
- 08:54