Following the FCA’s interim feedback statement last December, our sector was told to expect a definitive set of new rules sometime during the summer just gone. The window opened and closed without so much as a mention and, whatever the reason for delay in the timetable, indications are that final publication is still some months off. Maybe the regulator will provide us with some extra homework over the Christmas break.
However, setting aside the ETA, what is perhaps more telling is that, during this extended period of legal uncertainty, most of the sector’s biggest and most influential platforms (including ArchOver) have received full FCA authorisation – one of the industry’s true pioneers receiving the ‘green light’ only as recently as last month. This suggests that just the threat of new rules has been enough of an incentive for platforms to act on their own initiative, rather than wait to be ordered to eradicate certain practices under threat of the law. Wholesale lending across platforms, for example, is already a thing of the past although, on the flipside, delays in granting authorisation have probably cost Innovative ISAs a whole tax year’s haul of eager investors.
Maybe this was the FCA’s intention all along, in which case perhaps the regulator should be congratulated rather than criticised. Either way, the spirit, rather than the letter of laws yet to be enshrined in the statute book, has been recognised and acted upon. It is symptomatic perhaps of how rules have had to be made up almost ‘on the hoof’ as an entirely new sector of financial services has emerged and developed – but better, surely, than the US approach which has been to impose a rigid set of rules on a still-evolving industry.
Experience tells us that writing a granular rule book, based on ticking boxes, achieves very little except to show slick operators and lawyers how to circumvent narrowly drafted legislation. Surely it is better to decide exactly what it is that you are trying to achieve and then draft laws that at least try to anticipate future trends. Rushing out regulations simply to paper over existing cracks can only offer a temporary solution.
By contrast, that other major cause of uncertainty, Brexit, continues to blight industry and commerce. Many UK voters wanted to remain in the EU, but the ‘leavers’ carried the day. For goodness sake, let’s get on with it – stop wasting our energy on the phoney war, bring matters to a head and start proper negotiations so that we have a known direction and destination.