Late last year, following the the Financial Advice Market Review, we floated the idea of forming a Professional Advisers Regulator (PAR).
The response from the adviser community was very positive. A straw poll of Libertatem members also drew overwhelming support for the proposal and, as a direct result, PAR is now at the heart of Libertatem's strategy.
The reasons for PAR are simple. We believe that a dedicated advisers' regulator would do a better job than the FCA, and at a lower cost to the industry. By reducing these costs, advisers can, in turn, reduce their fees (should they wish to do so) making their services affordable to more consumers. In addition, by cutting back on bureaucracy, advisers will have more time to advise more clients.
The result will be exactly what the government, and the consumer, are after. Professional financial guidance, provided at a reasonable rate, dispensed to a larger audience.
Exciting, affordable and credible
The Government claim they want to see more consumers receive professional, financial guidance. But the past 30 years have seen the industry suffocated by regulation and hit by rising regulatory costs. This, in turn, has stifled growth, reduced investment and restricted the industry's capacity to advise. Conservative estimates suggest that more than 10 million consumers have been lost to the industry as a result of RDR, cutbacks and policy shift, especially by the banks.
The creation of PAR would not only replace a failing and unaccountable regulatory system, it would re-establish confidence in the sector and focus adviser efforts on doing what they do best – providing excellent, professional financial advice.
Can it be achieved?
The straight answer is YES. With Government backing, adviser support and consumer demand, we believe that PAR is a distinct possibility. Staffed by experienced industry professionals sympathetic to the needs of both the adviser community and the consumer, our first suggestion would be to place it outside of London. This would immediately reduce costs and ensure the organisation doesn't get sucked into the Westminster bubble.
Budgets would be set. Transparency and accountability will be demanded. A longstop would prevent retrospective FOS judgements from affecting forward planning. Advisers will be able to maintain PI cover at all times, removing fear and uncertainty from the industry.
But will it be achieved?
From the conversations we have had thus far, there is definitely a desire to see PAR replace the current regime. But the Treasury will have to see the adviser community and their clients unite behind the initiative to begin laying the foundation from which it can begin to take shape.
PAR makes perfect sense to those who understand what we are seeking to achieve. Advisers have become more professional. It is time they were recognised as a profession.