Top IFAs Gemma Siddle and Aj Somal have said the community should “welcome” and not fear more regulation as it will ultimately help improve standards in the industry.
Reform of the Financial Services Compensation Scheme’s (FSCS) funding will be at the forefront of what is set to be another testing year for advisers on the regulatory front. This comes as last year advisers faced the onslaught of change with MiFID II, which is gradually being implemented, and GDPR.
Commenting on the upcoming changes ahead, Gemma Siddle, chartered financial planner at Newton Aycliffe-based Eldon Financial Planning, said: “Last year was indeed a heavy one for the raft of regulation and this year looks to be fairly busy with the Senior Manager’s Regime coming in at the end of the year, and many firms still implementing MiFID II and GDPR.
“Regulation protects the profession as well as consumers; without it we would not have a profession at all. Having a healthy balance of regulation and treating clients fairly is vital. It can be too easy to hide behind paperwork and many compliance departments actively encourage this. However, well implemented structures with the client interests at the centre point of any development have little to worry about in the area of regulation. The Financial Conduct Authority (FCA) isn’t there to target firms that ultimately put client interests at the centre of their culture.”
This sentiment was echoed by Aj Somal, chartered financial planner for Birmingham-based Aurora Financial Planning. He said: “The onset of regulation is nothing new, and these new and proposed regulations have been known for some time now, so preparing in advance for firms and regulated individuals is crucial.
“Extra regulation is a positive thing, as it means making the industry more professional, and driving out those who do not take regulation seriously.
“Change is constant, and we cannot sit still, we have to always be on top of regulation and its requirements.”
The FCA’s regulation reforms on how the FSCS will be funded is set to come into effect in April 2019.
The regulator is trying to make the lifeboat fund simpler with life, pensions and investment intermediation to be merged into one funding class, and pure protection intermediation to be moved from the life and pensions class to the funding banner of general insurance.
Another major change will see providers contributing a quarter of advisers’ bills for compensation.
This mean advisers can expect an easier ride on the Mifid front, as more guidance is emerging on new disclosure rules, with the regime now having had 12 months to settle in.
However, when it comes to pensions, 2019 has begun with a new £69m FSCS levy on advisers’. The lifeboat fund has said the higher redress bills are due to unsuitable pension transfer advice and Sipp mis-selling.
The FCA has also said advisers are set to face “serious consequences” over poor transfer advice this year.
The pension industry is also expecting the new authorisations regime for master trusts to cause providers to fold, meaning advisers will need to keep a close eye on the potential fallout.
Auto-enrolment contributions are also on the rise and the pension cold-calling ban is also set to be introduced this year.
Aamina Zafar is one of the UK’s leading financial journalists. She has previously worked as a senior reporter at FT’s Financial Adviser. The award-winning journalist writes regularly on the IFA community, mortgages, pensions and financial regulation
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