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The case for compliance

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  • 01/07/2003
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The news that compliance costs are increasing for those already operating under the auspices of...

The news that compliance costs are increasing for those already operating under the auspices of Financial Services Authority (FSA) will come as no surprise to those who have been following the proposals for statutory mortgage regulation.

But while any cost increases caused by regulation are cause for concern, the news was tempered by the fact that a proportion of the increases has been attributed to one-off costs associated with moving to the new regulatory system. Indeed, few would actually complain if increased compliance costs brought in more professionalism and helped change outdated public perception of the financial advice industry. Again, if increased costs mean that the number of firms who, by their actions (intentional or otherwise), act in a manner which causes consumers to lose faith with financial services actually falls then it can only be a good thing.

It is too late for Pure Protection Network, which has just been put into liquidation despite its claim to be ‘the fastest growing non-regulated protection network in the UK’.

However, the news that the Treasury is to investigate whether to include home reversion schemes under the FSA’s remit and that the FSA is considering setting further exams for those intermediaries who want to advise on lifetime mortgages is an opportunity that many advisers will welcome. Selling equity release products will not appeal to every adviser as it can be a difficult and time-consuming sale, but for those who do, being able to show clients that you are taking the sale of financial products very seriously will be of immense benefit to individual firms and the industry as a whole.

The key issue is to ensure that the costs and requirements under regulation are balanced and actually engender the idea that financial intermediaries are skilled professionals. As usual the only way to ensure this happens is to respond to the FSA’s consultation papers.

Ben Marquand, editor


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