The Tories need to explain themselves, argues Joanne Smith, chief executive & creative officer at The Consulting Consortium
As the swine flu pandemic ‘conveniently’ displaced the expanses furore amongst the broadsheet and tabloid newspapers, the financial services sector continues to resonate from a few political rumblings. Of course I’m not dumbing down the potential of the swine flu outbreak and the horrendous deaths and illnesses that have occurred because of it but its emergence has certainly helped quell the fires of the expenses shambles that previously dominated headlines. A sceptic might even say that some of the shock horror headlines could be placed at the door of political spin to help extinguish the fires of the expenses scandal. However, as we all know political intrigue is never too far from the headlines, even during the renowned quiet news months of the summer, especially when it come to financial services.
To illustrate this, the recently published Conservative Party’s White Paper entitled: ‘From crisis to confidence: plan for strong banking’ made headlines across both the trade and national press by making it clear that it will completely restructure the existing regulatory regime, blaming it and the government for the recent banking crisis. The current regulatory regime was brought into being within days of the Labour government winning power in May 1997 but the Conservatives have now made no bones around how it proposes to abolish the FSA and create a new Consumer Protection Agency (CPA). Whilst we are used to political parties issuing headline making speeches, given the Conservative Party’s performance in the opinion polls and the necessity to hold a General Election within the next year, this White Paper cannot be ignored. There is every likelihood that come 2010 there will be a Conservative government in place and this probability only serves to highlight the Paper’s potential relevance.
Those firms operating in financial services should therefore ready themselves and their businesses for considerable change but it is also important to emphasise that whatever change may be implemented that regulation will not go away, it will just take on a different form. The impact on the Retail Distribution Review (RDR) is of particular interest. Under a Conservative government, with product providers being regulated by the Bank of England and IFAs and stockbrokers regulated by the CPA, there is scope for further consideration of the distribution model and how it should work to best serve the industry and consumers alike.
The CPA will not necessarily change the educational requirements of the RDR for intermediaries but fee-charging and the relationship between providers and intermediaries may well be impacted upon. In addition the increase in the industry levy will put further financial pressure on firms of all sizes. All in all this paper is quite possibly one of the most detailed set of proposals the Conservatives have put forward yet it still needs to say more, especially regarding the RDR.
It is vital that the Conservative Party give us a more comprehensive view of their intentions for the sector and this must then be articulated to the industry as soon as possible so that there are some, if not all, answers being given to combat the many question that this paper has raised.