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Chris Woolard was speaking about the FCA’s asset management market study at the Pensions and Lifetime Savings Association’s investment conference in Edinburgh yesterday.
He said it was positive that the industry was pursuing solutions, but what mattered was whether the final outcome met the needs of end customers. He strongly suggested the FCA will not accept an inadequate solution.
In the past, when regulators had sought industry-led solutions, they had all too often become “stuck” with “whatever comes out the other end of the pipeline”, Woolard said. “I want to be absolutely crystal clear we are not going to be put in that position,” he said. “So if we find that there are industry solutions that don’t measure up then that’s philosophically where we’ve got to be prepared to go to.”
The Investment Association is working on a standard method of cost disclosure, which was recognised in the FCA’s report, along with its own suggestions for improvements.
Woolard said there were “some very mixed views” on the FCA’s recommendation that it is allowed to regulate investment consultants. Questions around investment consultancy would not lend themselves to “an immediate silver bullet type answer”, he added.
In its report, published last year, the FCA recommended that the Competition and Markets Authority (CMA) launch an inquiry into the investment consulting sector. Speaking to the audience in Edinburgh this week, Woolard said the regulator had a limited range of powers to examine the issue and that the CMA was potentially in a position to do so “further and better”.
Investment consultancy “is not the first part of the financial services industry ever to encounter a potential conflict of interest,” he said.