Is regulation breaking UK Plc?

Regulation, we are told, is a vital part of society, it is local, national, European and some cases global yet despite it ever invasive, viral presence in UK society it seems that the more we regulate the worse it gets.

And the regulator in just about every case will claim it is not their fault.

Regulators raison d’être is to ensure that consumers are protected at all times, sometimes in every possible way verging on protection from themselves.

But regulation is self-perpetuating, a real life version of perpetual motion that pays a lot of money to those for whom that career path is chosen. For example, over the past decade, the average pay per employee at the FSA was around £78,000.

We all know about the failures of regulation in financial services, but would UK plc and its population (now commonly referred to as ‘vulnerable consumers’, ‘stressed commuters’, ‘long suffering motorists’ or ‘hard working families’) be better off as a result of much reduced regulatory action. Or see it replaced with that all important mix (of fast diminishing human attributes that regulation has rendered idle) common sense, caveat emptor and intuitition?Here is just a sample selection of regulators, where I think many reading this would see confusion, failure, cover ups, unintended consequences and huge spends seeing zero benefit for everyone except those that work in regulation.

There are many, many more.

Electricity regulation: OFGEM is the regulator; their strap line is “making a positive difference for energy consumers”. Deregulation and creating free markets (that in fact now need all this regulation) or the failure of regulators to keep up with fast-moving markets, can become unbelievably costly, as we can all now see. The worldwide electricity sector reforms of the early 1990s have revealed the complexities of introducing market driven reforms and making them work in network and infrastructure industries.

Were we better off pre- denationalization and pre regulation with just one supplier?

Gas regulation: OFGEM again. Ofgem found British Gas incorrectly blocked businesses from switching and failed to give some businesses notice that their contract was due to end. The fine was £5.6m, but really just another large fine that means nothing.

Most complaints about energy companies are about inaccurate, late or unclear energy bills. The Code of Practice for Accurate Bills from the Energy Retail Association sets out requirements for how energy bills should be calculated and issued.

Were we better off pre- denationalization and pre regulation with just one supplier?

Food regulation: That other FSA, the Food Standards Agency. Paris says Brussels and London are dragging their heels over proposals to improve food safety by introducing the labeling of meat in ready-made meals. And only last week we hear that the lamb in our kebabs is chicken or beef. The cost of food labeling compliance in the UK is estimated at £32.5m for just one major retailer.

Were we better off pre regulation? Were we better off when we did not have supermarkets and fast food outlets, seeing what we brought at butchers, bakers, greengrocers?

Telephone regulation: OFCOM is the communications regulator. We regulate the TV and radio sectors, fixed line telecoms, mobiles, postal services, plus the airwaves over which wireless devices operate.

The regulatory ‘Waterbed’ effect is already well illustrated in the mobile phone industry where regulation fixes the prices of basic products and services only for consumers to see significant increases in the price of peripherals and additional services as a direct consequence.

Were we better off pre- denationalization and pre regulation with just one supplier, the GPO?

Railways: ORR The Office of Rail Regulation are the economic regulator for railway infrastructure (Network Rail and HS1); the health and safety regulator for the rail industry as a whole – including mainline, metro, tramways and heritage railways across Britain; and the industry’s consumer and competition authority.

Were we better off pre- denationalization, privatisation and pre regulation with just one supplier- British Rail?

National Health regulation: Now here it get’s really complicated and it is little wonder that healthcare is in such a mess.

In hospitals we used to have a simple management structure, it was called ‘Matron”.

Look at these regulatory bodies, is it any wonder that we see so many problems, with the very simple mission objective being to make people better being thwarted at every regulatory door, often ending it would seem in DBNHS (death by national health service).

MHRA is the government agency responsible for ensuring that medicines and medical devices work, and are acceptably safe. The MHRA is a centre of the Medicines and Healthcare Products Regulatory Agency, which also includes the National Institute for Biological Standards and Control (NIBSC), and the Clinical Practice Research Data link (CPRD). The MHRA is an executive agency of the Department of Health.

CQC’s The Care Quality Commission (CQC) makes sure hospitals, care homes, dental and GP surgeries, and all other care services in England provide people with safe, effective, compassionate and high quality care, and encourages these services to make improvements.

NICE National Institute for Health and Care Excellence provides national guidance and advice to improve health and social care. It develops guidance, standards and information on high quality health and social care. It also advises on ways to promote healthy living and prevent ill health.

HFEA Human Fertilisation and Embryology Authority is the UK’s independent regulator dedicated to licensing and monitoring fertility clinics and research involving human embryos.

NIHR The National Institute for Health Research is a large, multi-faceted and nationally distributed organisation. Together, NIHR people, facilities and systems represent the most integrated clinical research system in the world, driving research from bench to bedside for the benefit of patients.

PHE Public Health England was established on April 1 2013, just like the FCA, to bring together public health specialists from more than 70 organisations, including the former Health Protection Agency (HPA), into a single public health service.

PSA Professional Standards Authority for Health and Social Care promotes the health, safety and wellbeing of patients, service users and the public, by raising standards of regulation and voluntary registration of people working in health and care. It is an independent body, accountable to the UK parliament.

Is it any wonder that doing businesses, society and life in general is made more expensive, difficult, confusing and less fit for purpose?

Here, with some help from Wikipedia, is a list of some I may have missed:



  • Ofqual – Office of Qualifications and Examinations Regulation
  • Ofsted – Office for Standards in Education, Children’s Services and Skills





Social Care



PhonepayPlus – regulator for phone-paid services in the UK, part of Ofcom, replaces ICSTIS


EU leaders met in Brussels in October 2013 to discuss ways to improve growth and competitiveness across Europe. Using data from the UK Government’s impact assessments of these rules, Open Europe estimated that the top 100 EU laws cost the UK economy £27.4 billion a year. This was more than the UK Treasury expected to raise in revenue from Council Tax in 2013 (£27 billion). 
And laws equal regulatons equals regulators.

Those hardworking families are doing so just to keep this lot going.

The unintended cost burdens of regulation in the UK are almost unquantifiable, certainly vast and in almost every case there are grounds to think that life could be simpler, cheaper and more fulfilling if we all took responsibility for our actions, adopted common sense in management styles, business practices, directives and substituting ‘elf and safety’ with sanity.

Time for a rethink?

How much is that doggie in the window?

So, three in four firms failed to provide the required information on the cost of advice.

There has been much focus on the restoration of trust in financial services and it would not be unreasonable to assume that clarity on the “how much” bit could be seen as a cornerstone. The FCA is looking at how this is explained or quantified by advisers. The advisers may be looking at it from a client querying perspective as in explaining  “how much” and why!!!!!!?????

FCA research around clarity over advice has really caused a stir with firms failing to give clients clear, upfront, generic cost information  give clients clear confirmation on how much advice would cost or give additional information on charges and that they may fluctuate.

Additionally, a third of firms offering a restricted advice model were being unclear about the restriction and for what. service were not being clear they were restricted, or indeed the nature of the restriction, and a third failed to give clear explanations of fees for  ongoing service as well as their rights to cancel.

Clive Gordon, who we met with in March and is FCA Head of Investment advisers and platforms said: ‘the findings demonstrate a lack of engagement by the majority of firms. In the July [2013] document we put out good and bad practice because we have done research on industry engagement and the industry likes that. We also distilled down the key messages in a two-page factsheet.

‘We have been engaging with the industry but I think the results we are publishing today just how that the vast majority of firms have failed to engage with that.’

I think that what we found out at our FCA recent meeting is that advisers see ‘regulation speak’ as something that is directed at them rather that toward them. On the regulator’s side, they see that the issuing of a document riddled with regu-speak is sufficient to have made everything very clear indeed.

If this is a failure of either side or both it needs to be addressed. But is there a deeper-seated problem, in Churchillian speak, a version of “”two nations divided by a common language“?

In this case the mighty USA being represented by the FCA (what a thought) and the advisory community being Britain?

As Lee Werral, the Compliance Doctor at Compliance Conslutants observed:“Advisers have had 25 years of regulation and point of sale disclosure and still cannot seem to understand that you have to declare what you are going to charge and why, and what the ongoing charges are and why.

Many still use the excuse that they don’t know what size of assets/funds etc that the client holds – so my question is, why are you discussing prices without having a conceptual agreement in the first place? Surely the initial (free) interview is to establish this, but IFAs seem to, as they want to “compete on price alone” still want to compare themselves against others in the area. 

Most professional salesman understand that you need to get a conceptual agreement from the client, a full understanding of their goals and aspirations etc before you can provide a true cost – one which adds value to the client.

Yes, a menu of charges is a good idea (typical costs) but this can be sensibly constructed without committing the adviser to any specific combination until the fundamental needs have been established. If advisers want to advertise themselves like a Kebab Shop and fail to constructively inform the clients what the charges are and why the charge is being applied, or what they will get out of it, then they deserve to be referred to enforcement.

Part of the problem is that many advisers still see that they have to get their 3%/5% or whatever from pre-RDR days into a post RDR fee. Frankly, the world has moved on. Yes, you can quote me on any of that.”

A year ago we highlighted concerns that regulation regarding the various FCA diktats and tomes reckoning that they would benefit from being put intoplain English. 

Here is a great example of FCA ‘clarity speak’ “Behavioral biases can render regulatory interventions aimed at addressing information asymmetries harmful”. And that means?????

On Clive’s own admission, perhaps they need to look more closely at how they communicate and on what frequency. If that was better and structured in such a way to influence “understandings of the common man’, we may see a dramatic reversal in this disturbing trend.

As a point of interest, there are many financial organisations who have beenawarded the Crystal Mark by the Plain English campaign.

The FCA does not seem to be on the list, that may be a good point for them to start their ‘clarification works’.

Trail matters & FCA meeting

Following our recent survey on trail and the snapshot poll we did late last year, I can report that we have now had a meeting with the FCA to discuss adviser concerns.

The meeting took place with Clive Gordon- Head of Investment Advisers & Platforms Supervision, Richard Taylor- Savings, Investments & Distribution Policy, Risk & Research and Michael Newton from the Long Term Savings sector.

It is interesting to note that Richard is tasked with looking at unintended consequences of RDR. He did a lot of writing during the session.

From our corner, we had Garry Heath, Lee Travis from NMBA and Sarah Paul and myself from Panacea Adviser.

Sadly we only had one hour of time allocated by the FCA but I do believe we did get some of their attention around a number of key issues. I attach a copy of the mail I sent to Clive Gordon that will assist in ensuring that as many concerns as possible can be looked at.

In particular we wanted to ensure that there was a clear understanding of what trail actually is, what it means and why it is so important, especially to firms with many years in business.

We wanted to ensure that trail from legacy products was not removed and that some clarity was given around this subject as it is the view of many that it is only a matter of time until either the regulator or the providers remove this.

The FCA sees trail as being something that should see an ongoing service, this is not necessarily contractually the case with legacy trail, especially where firms did not take initial commission although some purists may take a very different view.

It would be fair to say that many of the possible consumer detriment issues we highlighted had not been seen until now.  Neither had the impact that removal may have on the viability of adviser businesses as well as the almost complete destruction of embedded value being amongst them

Garry made some very powerful representations based on his current and past experiences and was rightly critical of APFA, who many see as not having stepped up to the plate when it was most needed.

Strangely, the FCA don’t believe it is their responsibility to help advisers communicate to clients the impact of regulatory change but accept they need to more clearly communicate to advisers and accept that there can be confusion with clarity of some of their communications with the caveat that some empirical proof should be provided where possible

We agreed a number of steps need to be taken, Clive was very keen to make the point that the FCA was not about to unravel RDR, and that they would not guarantee that they would make any changes in regard to concerns around trail removal…… but they did say they would listen, and would want to meet with us again on a regular basis.

And that is a starting point.

They also made it clear that they want to move away from FSA way of doing things.

Actions to follow will include working with the FCA to create an adviser guide around trail matters, because trail matters a great deal. 

Time for a socio rethink

‘Fifty shades’ author E L James said, “Language evolves and moves on. It is an organic thing. It is not stuck in an ivory tower, hung with expensive works of art and overlooking most of Seattle with a helipad stuck on its roof.”

But language shapes the way we think, and now actually determines what we can think about, what is socially correct to think about.

In an increasingly politically correct world, where a new form of self righteous ‘Puritanism’ seemingly reigns supreme, language has taken a totally new direction in describing many things that previously had a particularly clear understanding as being something else, encouraging some form of self serving, hand wringing, soul cleansing, social inclusion that absolves society of blame or stigmatisation whilst simultaneously removing or erasing common sense, liability, responsibility, guilt and reason from the supposed victim.

The English language today is being highjacked by some crazy variations of evolution.

According to new ‘diversity’ guidelines, normal persons in the presence of people with disabilities should not be referred to as ‘normal’ but rather non-disabled persons. Clumsy individuals are now called “Uniquely coordinated”, if lazy you are now called “Motivationally deficient”, if you spend spend spend you are now a “Negative saver” and if you are one of life’s failures, in addition to being called vulnerable you are now deemed to have “Achieved a deficiency”.

If you are Gwyneth Paltrow and Chris Martin you do not split up, you have a “Conscious Uncoupling”.

Public facing governmental offices and hospitals now have ‘clients’ AND we now no longer have customers- we have consumers’. Grrrrr

I have become increasing concerned about the prevalence of the term ‘vulnerable’. It seems that in today’s touchy feely, oh so caring society, the term has become overused to the point that it is now meaningless.

There is not a day that passes where you will not read or hear the word. The BBC is particularly adept at its misuse, regulators, civil servants and politicians likewise.

Vulnerable as an adjective is described in the Oxford dictionary as “exposed to the possibility of being attacked or harmed, either physically or emotionally”. A thesaurus throws up many other words like exposed, sensitive and defenceless.

In our industry the vision regulators want the word conjuring up is meant to display advisers’ clients as under ‘fiscal attack’ from unscrupulous and uncaring firms.

What is your view of a vulnerable person?

Is it determined by physical or mental disability? Is it financially related?

Vulnerable is now used as a noun to describe or quantify a social collective, in this case the collective has been formed by way of being seen to be someone cast aside by society, a victim not responsible for their plight and dependent upon someone, anyone, coming along to reset the counter to zero so that they can do it all over again.

Vulnerable in many cases today is now used to describe someone who previously was known as simple, stupid, irresponsible, reckless, dangerous, a scourge on society and in doing so the truly vulnerable are done a great disservice.

Regulators are very fond of claiming that “vulnerable consumers” must be protected. A very good example of this is the latest FCA thinking on “Debt management firms selling ‘unsuitable’ plans”.

We are now looking at the very real possibility of regulation actively protecting people from their own stupidity. That is not a regulatory mandate yet we seem to be powerless to stop it. It is another way of unaccountable bodies generating work to justify their own existence instead of doing what it says on the can.

The FCA is the Financial Conduct Authority; it is not the Feckless Cuddling Authority.

In many cases these will be the same ‘vulnerable’ people who avoid the FOS and go to CMC’s in pursuit of a fast buck. After all where there is stupidity there is a stash of cash- for someone, although it is often the case that the stash is for the lawyers as they prey by statute on the vulnerable rather than protect.

So let’s have a rethink FCA, BBC, Parliament. Vulnerable is that person in a wheelchair, that person who cannot move, see, hear, walk, talk, and feel and is truly reliant on someone else to care for them.

It is not someone who was previously known in a different socio economic time as a waste of space and should be avoided at all costs.

Next week I get started on ‘hard working families’.

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