On 14 June 2012, Clive Adamson, Director of Supervision of the Conduct Business Unit at the FSA gave a speech to Marketforce and the Institute of Economic Affairs entitled ‘Regulating in a new era of professionalism’ which gave a high level view of the changes taking place in UK regulation, how the FSA expects professionalism to play a part in this, and what it means for regulated firms. Speech.
The main points were as follows:
• It is the FSA’s intention that the Financial Conduct Authority (FCA) will look and feel different from the FSA. The aim is to move away from a primarily reactive style to a judgment based, confident and pre-emptive regulator that acts to ensure consumers get a better deal and markets are fair and orderly.
• The new supervisory approach will comprise of five main elements:
• More forward-looking in assessment of potential problems.
• Intervene earlier when the FCA sees problems.
• Address the underlying causes of problems that the FCA sees, not just the symptoms.
• Secure redress for consumers if failures do occur – for example, as with payment protection insurance.
• Take meaningful action against firms that fail to meet the FCA’s standards, through levels of fines that have a credible deterrent effect.
• A key component of the FCA’s approach is to continue implementing the work that the FSA has already started around professionalism and provision of advice.
• The Retail Distribution Review (RDR), which comes into effect on 31 December 2012, is an example of action being taken to fulfil one of the FCA’s operational objectives – consumer protection.
• The Retail Conduct Risk Outlook (RCRO), published in March 2012, also sets out the regulator’s views on how professionalism needs to be at the core of advice for long-term savings, including pensions and retirement planning.
• From an industry perspective, firms should look at their customers as unique individuals, consider their personal situations and fully understand their objectives and potential financial needs. Advice should be just that, advice – not a sales/product driven process.
