Campaign: NO FSA IMMUNITY
Prosecuting the FSA is the only answer
by Ashley Clark, Director - 06/04/2010
A new adviser support group formed by an IFA, has suggested that only the risk of prosecution or personal financial penalty for regulators will improve regulation and financial stability in the UK in the long term.
Advisers United.com, set up earlier this year by Need An Adviser directors Ashley Clark and Joanne Roberts, suggests that removing the FSA’s immunity from a claim of negligence under conduct of business legislation or the Pensions Regulator’s ability to pass costs to other Pension Scheme Trustees for their own failed monitoring is the only way to solve continued failure within the finance industry.
With immunity gone, regulators would be forced to wake up and monitor correctly. They could easily reduce the number of UK employers simply going into administration to pass on pension liabilities or investment companies who close and pass on their mis-selling liabilities to be funded by yet another compensation scheme levy on the “good", well run companies. Blaming the trustee or in the case of the FSA, passing the cost on to another profitable “fee block sub-category” such as IFAs is just not good enough.
Clark said: “As I sit here with yet another additional FSCS top-up levy bill on my desk for £000's payable within 30 days, due partly as a result of the FSA’s failure to regulate insolvent investment companies and stockbrokers, I note there is no financial penalty for the FSA’s own failure in the matter, so ultimately regulation in its current format is doomed to fail.” Clark added: “This is not rocket science. Why is it that in difficult times I and many other firms face the choice of either not getting paid next month or taking immediate, remedial action of consolidation or expansion with good, honest business decisions to survive yet regulators and compensation schemes act like Oliver and just ask for more money despite being culpable?”
Clark suggests that the FSA’s hopes to clean up the financial industry with enforced standards for education, higher capital adequacy, clarity on commissions and fee charging to the consumer via RDR and no doubt more fines and compensation claims are again ill judged. “Do they not realise that some big "restricted advice" companies will continue to make even more money by giving poor advice and probably already build fines into their pricing models? The math is simple. Which is cheaper for a bank: a £1.5m fine every few years, approximately 5 seconds lost profit for some larger banks, or thousands of staff being taken off the road for days on end to be trained with new procedures on stricter, less profitable, business models resulting in millions of pounds in less commission income? They’ll choose poor standards and the fine every time.”
Clark believes there is no incentive for regulators to ensure that regulation works, in fact, he suggests there is a conflict of interest as regulators use ever increasing fines to fund their burgeoning running and pension costs. “Fines are a huge source of revenue for the FSA and until all fines go to the FSCS rather than being used to offset fee block regulatory costs which, are just FSA running costs in another name, in addition to also removing the FSA’s immunity from prosecution, regulation with always fail.”
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