A pointer to this outcome can be found as recently as summer 2023.
Some 59,079 firms were limited liability companies, the second highest group were 9,346 sole traders, according to the FCA register. They are the most vulnerable right now.
At mid-summer this year, 575 firms joined the register along with some 10,012 individuals. To the same mid-summer date 7,739 firms de-authorised, seeing 15,206 individuals calling time on a regulated life. That is just for the six months up to the summer of 2023.
This surely must send a message to Pritchard at the FCA, and to Afolami at the Treasury.
Fears that the industry would be completely decimated still remain, especially when looking at the FCA’s latest 'CapAd' proposals that would require advisers “to calculate their potential redress liabilities at an early stage, set aside enough capital to meet them and report potential redress liabilities to the FCA”.
The idea is that any firm not holding enough capital will be subject to automatic asset retention rules to prevent them from disposing of their assets.
This is a recipe for disaster for the SME adviser.
I do not know how long it will take the FCA to understand the advice market it regulates, and who would benefit if they can actually get it right?
This ‘CapAd’ idea will see smaller firms cease trading, bigger firms getting bigger on a feeding frenzy and supposedly more resilient, providing consumers with higher cost advice outcomes.
It will not see “a thriving financial advice market to make sure consumers can access the support they need from financially resilient advice firms that want to do the right thing”.
The problem is that responsibility is always about the advice and never the product.
Panacea warned back in 2010 that the RDR, despite its many good points, could have the unintended consequence of "disenfranchising” the majority of consumers from access to financial advice.
There was no doubting that the RDR was a great commercial opportunity for a number of interested parties, some capitalised on it greatly – large wealth management firms, consolidators and long-established fee-based only IFA firms.
But no opportunity was created, it would seem, for the mass-market consumer, the very people that RDR was meant to help and that the FCA now decides it wants to help.
It was clear from as early as 2009 that the regulator had chosen to ignore the very clear, wise advice given by many leading industry figures who have seen the effect of badly thought-out regulatory changes of direction before, remember NASDIM, FIMBRA, PIA, FSA and even the OFT?
