“Much more work is needed” to build a better advice guidance model, according to Charles Randell, former chair of the Financial Conduct Authority.
Speaking to the Financial Services Regulation Committee in parliament today (October 23), Randell explained there is a “very serious problem” with not allowing retail investors to access more products.
“This was something that I identified when I was FCA chair and I set the organisation the task of reviewing the boundary between advice and guidance and trying to come up with a better model,” he said.
However, he reported that progress in achieving this goal “has not been good” and acknowledged that “much more work is needed to solve that problem”.
Randell also underlined the importance of retaining trust in financial services.
“Whenever the government thought it was a 'bright idea' to give retail investors exposure to things such as mini-bonds, eventually, the result is investor harm and a loss of confidence in financial services,” he said.
“That distrust by the finance sector is one of the reasons why there is low engagement.
“We really need to be careful that, in promoting risk to classes of people who can’t bear it, we don’t further undermine trust in financial services products.”
FCA transformation
Additionally, Randell described how the authority had changed since his tenure as chair, stating that it has continued to evolve.
"The organisation was beginning to transform under my tenure as chair and the transformation has continued but still has some way to go,” he said.
He acknowledged this may be an ongoing process, stating: “The FCA will be the first to admit that several years will be required for it to achieve its full potential.”
Randell also pointed to specific areas of progress, saying: “In some areas of underperformance when I was there, I have seen a considerable transformation.
“For example, at the point where I left, there was still something of a crisis in the authorisation function as a result of a combination of the additional workloads of Brexit and the operational impacts of Covid..
“Those factors coming together created an unacceptable backlog, but we now see that the operational performance of the FCA is transformed.
“I see an organisation that is getting better all the time.”
tom.dunstan@ft.com
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