Another year is past and before the retail financial services sector has had much of a chance to take stock of a post-RDR world, the next regulatory steam train is hurtling down the tracks of 2015. I refer of course to the new personal accountability framework and the further ramifications of the legislative changes stemming from the recommendations of the PCBS.
The extent to which this will affect the broader financial services sector is at yet unclear, but certainly those banks directly affected will have little time after the consultation period in which to implement changes. Although ‘non- relevant’ firms may escape the absolute prescriptive frameworks, Martin Wheatley and team have made it very clear that we can expect the levels of accountability and the same scrutiny of top down compliance to be pretty much applied across the board.
It is hard to sum up 2014 in terms of training and competence without referring to what happened in the previous year and what is coming in 2015. I would perhaps do so under four broad headings:
Personal Accountability; Conduct; Scandal and Hindsight
Do you see a common theme developing here?
Let’s take the last two first. The word ‘scandal’ is bandied about these days with almost wanton enthusiasm. In most markets, if you buy a product in good faith and your needs change, there is no compensation and no fines levied.
Not so in the financial services industry. At the FCA’s Enforcement Conference, Mr Wheatley talked about benefitting from ‘20/20 hindsight’ when undertaking regulatory action. He added ‘Retrospective regulation generally speaks against the principles of natural justice and it is something that the legal system tries to avoid’. The FCA, however, has been very keen to highlight the interest-only mortgage miss-selling ‘scandal’ which is clearly gathering momentum and the retrospective and backdated enforcement that will almost certainly come from it – not to mention the mass compensation feeding frenzy that will no doubt result. Perhaps this tells us more about the FCA’s regard for natural justice than anything else.
In summary, the financial services industry is feeling the force of ever mounting regulation, legislation and enforcement – some of which is now retrospective and hindsight based.
We can only expect more of the same in 2015.