No age of austerity at the FSA | Opinion | Money Marketing#comments#comments#comments#comments

No age of austerity at the FSA | Opinion | Money Marketing#comments#comments#comments#comments


Mike Fenwick | 20 May 2010 10:49 am

Start with this question: For what, or for whom is this "intensive supervision" intended?

There are to be costs, but for whom are any benefits intended?

Is the "intensive supervision" aimed at a small one man IFA offering advice on say a mortgage protection policy?

Or is it more likely to be aimed at larger multi-faceted players operating in complex global markets?

We hear constantly from politicians, economists and regulators of the need to address what are called the "too big to fail" entities. Are they the problem?

We hear very little, if anything, from those same politicians, economists and regulators on the impact which increasing regulatory demands make on the small IFA, demands which increasingly render them "too small to succeed". However, given the problem, could IFAs be part of the solution?

Perhaps we need a more important question: To what extent does the average person in the UK require the services of the larger multi-faceted players operating in complex global markets?

Perhaps the answer is sometimes, at some stage. but is it always, every day, week in week out? Do the basic day to day needs of an average person, needs such as a bank account, a mortgage, some life assurance, a pension require that they must be served by those with global ambitions on an every day basis?

Very shortly in the budget currently being prepared by George Osborne, and in the spending review due later this year, the average person in the UK will become only too well aware of the costs of those with such global ambitions. Costs by way of job losses, by way of reduced public services, by way of either inflation or higher interest rates, or both - it will not be pretty.

But will they also be as aware of the clear failures in our regulatory systems, the systems that were intended to safeguard us all from the future we now face? Will they be as aware that our regulatory systems only apparent answer is to increase their costs - but with no greater guarantee, indeed with no guarantee whatsoever of greater success?

Perhaps, just perhaps, rather than increase the costs (exponentially) to - belatedly - address the real size of the problem, an alternative might be to reduce the size of the problem, to find the ways in which the needs and requirements of the average person in the UK can be offered without having those met by entities which are "too big to fail", with costs when they collapse which are too heavy to bear, and with the then nearly assured request from our regulators for even more money.

Should IFAs give some thought to finding such alternatives, alternatives which better address the needs and requirements of the average person?

Or should we just leave it to the politicians, economists, and regulators?