19 Apr London Mortgage broker bids “Farewell the FSA” – a mere aperitif of regulation.
In the beginning of the regulatory world there was nothing. To be fair – it was like the Wild West.
So the 1986 Financial Services Act came along to shake things up and protect the UK individual – along with Big Bang!
But before any regulator could turn up, IFAs went wild and recommended people opt out of their final salary scheme and into high commission generating personal pensions.
That one blew up in everyone’s faces. Glory days for the lawyers.
As a result we moved from the regulatory wilderness to a regulator’s nirvana. By the mid 1990’s we created the following bodies:
LAUTRO (Life Companies)
IMRO (Investments)
FIMBRA (Brokers)
SFA (Securities)
PIA (Personal)
SIB oversaw the lot. These were the times of the Monopolies & Mergers Commission (it was widely commented at the time – there was only one of these).
Glory days of rules and regulations, KPI’s and documentation bliss. Wowee – more paydays for the lawyers.
This was a crazy system so in 2000 the Financial Services and Markets Act rolled the lot into one – The Financial Services Authority (2001), lovely skyscraper in Canary Wharf. Another nice trip on the legal gravy train consolidating that lot.
London Mortgage broker – nothing can go wrong
This didn’t cover mortgages (amazingly) but nothing could go wrong with mortgages. There was the MCCB and the Council of Lenders, with voluntary membership and general fluffiness.
Anyway this tinkled along quite nicely for a bit. On “A” day the crazy UK pension’s laws were “simplified”. Any look at your pension today I am sure has you heaving the sigh of relief that those complicated pension days have been today’s straightforward rules. The Pensions Regulator (TPR) looks after this now.
Did I mention European directives, regulations and principals? No. Let’s not go there.
Money laundering? Bank Of England, Treasury and FSA tripartite agreements? The Office of Fair Trading? The Information Commissioner and the Data Protection Act?
Money Advice Service
Did I mention the Money Advice Service set up in 2011? Government agency not allowed to give advice.
Anyway I was talking about the Financial Services Authority. So, the world blew up and the banks went bust and it was all terrible and everything like that. The lender of last resort stood up (the government) and bailed out the banks (Lloyds & RBS to c £75 billion, Northern Rock 100% – Casino banking was introduced with a 100% capital guarantee should you lose). Of course the government is actually funded by…..the taxpayer…who is protected by….The FSA.
No more FSA
So, no more FSA – but thanks anyway to (Lord) Turner and (Sir) Hector Sants.
Right time for The Financial CONDUCT Authority (FCA) and the Prudential Regulatory Authority (PRS). Very posh offices just opposite us in Moorgate, very plush and totally refurbished. Nice. Happy lawyers too I should imagine.
And now we are safe. Let’s have a good bit of muscle flexing next and strong talk and all that good stuff. Possibly a few characters who can make a difference for a bit will show themselves. I hope so. The real question is not what they do now – but who will be in charge the next time we get in trouble and will all / any lessons be learnt. I wonder whether we will have any more boom and bust. I have stopped wondering – I have decided!
Auto-enrolment
Bad news – money printing and QE and super low interest rates shafting all the pensioners and savers – but we have got to move forwards out of this crisis – so shutup Granddad or leverage up.
Anyway we now have auto-enrolment…so everyone HAS to contribute towards their own pension, so it will all be cool. In principal this is an epic move forwards (although pensions have dreadful dreadful PR). Chat to a CFO or HR director and all is not so cheery though. It is spectacularly complicated.
Which does ask the question where are we really going on this journey? We seem to be continuously reinforcing the message we need to save ourselves from ourselves.
25 years of financial regulation
Today we penalise savers. We punish those with savings and the whole concept increasingly is unfashionable. You may read that we sit on 25% of GDP in cash – this is because those who have it have no clue where to invest that is safe. A dreadful outcome after 25 years of financial regulation.
Perhaps it is still only early days really in the evolution of financial services regulation. It seems naive to think that this latest version will promote and create safety. More likely learn some further hard lessons after the event. Perhaps, like the European Union, the first 25 years is merely an introduction, a mere regulatory aperitif.
Do you know what – I think I might tell my daughters to study for some legal exams.
In the meantime we are heads down but eyes open in our mission to make London’s professionals prosperous, in whatever circumstances and mess we have to operate in.
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