AIFA's report, ‘A Manifesto for Regulation’, sets out six high-level principles that should apply to the governance of regulation.
The report, produced by AIFA and its Council, has been submitted to both HM Treasury and the Treasury Select Committee as part of its respective reviews of the proposed regulatory architecture. AIFA is also encouraging members to use the report to engage directly with MPs on regulatory reform and the issues affecting the advice profession.
The principles of regulation include: the need for regulation to protect consumers while delivering better outcomes for them; for regulation to be cost effective; and for it to focus on those within the industry that pose the greatest risk.
Andrew Strange, director of policy at AIFA, said: “Regulation is essential for good consumer outcomes. But constant regulatory flux deters financial investment in firms and weakens consumer trust in the sector. Regulation must be cost effective and focused on those that pose the greatest risk and include robust external accountability mechanisms.
“Judging the current Retail Distribution Review by these six principles there is a real danger it will be seen as a failure. While we support the original objectives there is a serious risk of driving out good firms, increasing the costs of advice and reducing access to the financial services market for UK citizens.
“The new regulator needs to address the wider public policy agenda in order to help consumers re-engage with their long term financial well-being and making more, and better, provision for themselves. This should involve closing the savings and protection gap being a statutory objective of the Consumer Protection and Markets Authority. It must act in a way to increase access to advice not reduce it.
“The success or failure of regulation in the future needs to be measured against these standards. This will deliver a better outcome for consumers, the advice profession and the financial services industry.”
AIFA’s six principles for regulation are that it must:
• Enable better outcomes for more consumers
• Have the appropriate checks and balances in place to ensure accountability
• Work in a proportionate and risk-based way
• Changes less, with fewer “new ideas” and more consistency of delivery
• Be cost effective
• Take into account the European dynamic at play
Katie Taylor, political analyst at AIFA, added: “It is clear from the level of correspondence we have with members that regulatory architecture is top of their agenda. The future regulatory architecture is a policy priority for AIFA.
"We have been closely involved in discussions with Government, opposition and interested MPs to ensure the voice of the IFA profession is heard.
"And we will continue to represent the interests of members in this vital area.
“We are actively encouraging members to use the arguments and principles in this report to contact politicians and outline how they want future regulation to operate.”
The full report is available at www.aifa.net
