Oh No Not More Expense

Will the fsa ever come to any decision over anything, which will not end up costing firms a fortune? They need to remember a lot of us are small businesses that do not have unlimited funds.The Canary wharf brigade do not have to consider costs-they have an unlimited supply on tap. The rest of us live in the real world where whatever we do has to match the funds we have available.

Posted by: Anonymous

But what is wrong

Yet again we see the all encompassing power and grasping nature of the FSA. It admits it does not have the authority to regulate trade bodies (directly) so it will do so indirectly. You may ask a) what this power will do to improve consumer service b) what cost effects it will have overall? And precisely what is purpose of FSA recognition? Are the FSA just becoming control freaks? This article did point me to CP09_31. And yet again the FSA open with a comment that is now accepted as fact, but has never actually been demonstrated or supported by facts, namely, "insufficient consumer trust and confidence in the products and services supplied by the market". FSA - please elucidate with specific examples. It also makes the bizarre claim that modernising the industry will give consumers more confidence and trust in investment advice. FSA - please state the basis for this assumption. If you say things often enough people will believe them. Put them down in writing and they must be true. No one is saying that the financial services industry is perfect. Nothing is perfect (other than the FSA!), but there is no evidence that I am aware of that indicates that the level of deviancy in the financial service industry is at any higher level that any other industry or even that it is unusually high. There is also no evidence that overall consumer confidence is abnormally low - indeed there have been many polls that demonstrate that clients are remarkably happy. Every week we have a major controversy on the parenthood and sight of referees (in whatever sport) and every week people go back for more. Criticism is not the same as lack of confidence. Arsene Wenger gets a fair amount of criticism because Arsenal haven't won a Trophy recently, yet it is impossible to get a ticket to an Arsenal match, despite the ground capacity rising from 35,000 to 65,000. Criticism is not the same as a lack of confidence. We are in a culture that is increasingly litigious, and yet the level of complaints in respect of financial services is, I would maintain, well within normal expectations. By the FOS's own figures 60% of complaints relate to Banks, and a further 18% relate to general insurance. Only 3% relate to IFAs, and, believe it of not, only 2% relate to building societies. Of the complaints about mortgages 58% are related to banks and just 10% to building societies. On Payment Protection Insurance 76% of the complaints relate to Banks. There is an indication here that if there is a problem, and it is an if, then there could a more focused solution. I say "if" because there are no statistics that demonstrate the overall level of complaints relative to the size of the market. Are these complaints 1%, 10%, 20% of the market. We haven't a clue. For example, there appear to be a large number of complaints regarding Payment Protection Insurance. This would seem to indicate that it is being wrongly sold, in which case one would suspect that the Insurance Houses are making excess profits on this product. If this is the case then there is an anomaly arising. Classic economics would suggest that were there are high profits other companies would enter the market to benefit from the high profit rate, and thereby increase competition, and pull the market down to a more competitive level. I don't see any of this happening, so the question the FSA should be asking is "Why Not?". This does appears either to be a market anomaly or an indication that the FSA are making a mountain out of a mole hill. And why would the FSA want to do this? Well it could be called self preservation. They are not going to grow big and be rewarded with high bonuses if they were to indicate that, in general, the market was quite sound and well run. Nothing is perfect; improvements are always possible, but it is a well researched fact that trying to improve something beyond a natural level requires a cost injection that is out of proportion to the additional benefits achieved. Could it be that the financial services industry operates at that balancing level already? I doubt we'll ever know because there are too many senior people who do better from not knowing. Growing the FSA to ever greater size by taking on powers they were never granted initially decidedly improves the salary package of lots of people - generally at the expense, ultimately, of the consumer. Now that's Treating Clients Fairly.

Posted by: Glen McKeown

response to criticism?

Wouldn't it be nice for once to see a well explained rsponse from teh FSA to Glen's well set out criticism that isn't just waffle from them?

Posted by: Phil Castle