What's next for brokers as FSA gives commission disclosure boost?
Brokers will be heading in to Christmas with a spring in their step knowing that they will not be forced in to a mandatory disclosure regime. The battle may be won, however the war is not yet over and brokers still have plenty of work to do.
Once the industry guidance, which has been designed, built and written by Biba, has been approved by the FSA, brokers will need to take a serious look at what they are currently doing and what they are currently not doing, in order to meet the FSA’s outcomes and show the regulator that it can work.
Biba is urging all brokers to make notes of everything they do in order to achieve the outcomes, so not to be caught short by the regulator.
As Biba’s Steve White admits, it is the last chance saloon for the industry to show the FSA that it can work these issues out itself. If the market does not latch on to this lifeline, then the FSA could be forced to reverse its decision. However, even the FSA is confident that the market solution can be a success and plays down any future changes to its five customer outcomes.
“We are in a place now where we can work with an industry solution that has every chance or solving the issues that we see as major outcomes. What is new is that we have developed an understanding on what needs to be achieved and I think that is extremely encouraging," says Ed Harley, head of retail policy and financial promotions at the FSA.
Many may have thought that the industry and the FSA could not have worked together on this issue. When the FSA published its discussion paper, many thought that there was no question that the FSA would make disclosure mandatory. But the industry has responded well and has come together. Despite some shouts from some firms in certain quarters that were pro-disclosure, the anti-disclosure brigade appears to have won the day.
A host of trade bodies including the IIB and the ABI, both heavily involved in discussions, have offered their support to the FSA’s decision. Barbara Bradshaw, chief executive of the IIB, said: “We have an important role in disseminating the guidance once it is finalised. Implementation of the guidance is the key to avoiding regulatory intervention in the future.”
Only Airmic so far has questioned the decision. It is disappointed by the time it is taking to produce the industry guidance, and raised a question over a broker’s capacity during a transaction.
With the FSA set to announce on the Industry Guidance in Q1 2009 only time will tell on whether the industry can work with it.