Regulation: Wealth manager watch

Simon Collins

Simon Collins, managing director, RGP

It is probably fair to say that the FCA has got a good grasp on the issues affecting the retail sector. It may not have dealt with them all and certainly the post RDR work continues, most recently around the value of ongoing services and the impact of consumer credit in its domain will use up significant resource and energy. But there is also a discernable move to get more under the skin of the wholesale sector.

Historically, the wholesale sector has not had the level of attention afforded to the retail sector around treating customers fairly and poor conduct. But given the FCA’s objectives around market integrity, competition and customer protection, it has a lot with which to engage fund and asset managers as well as the investment and corporate banks.

With Mifid II around the corner, the recent FCA “call for input” to the sector signals the intent to look more deeply at information asymmetries, use of commissions in research, disclosure and management of conflicts. Overlay this interest with the “conduct” agenda and firms really need to be thinking deeply about how their strategies benefit their customers as well as their own bottom line and consider their operational risk exposures. 

There is also the potential impact of a problem not only creating a redress issue but also a customer detriment situation to consider. Converging regulatory incidents create serious reputational damage and are a sequence of events the FCA is keen for wholesale firms to have considered long before problems have a chance of crystallising.