Survey reveals cost of regulation remains biggest challenge for advice firms
23 January 2017
25 October 2018
Personal Finance Society
The cost and uncertainty of regulation and compliance remains the biggest threat to the success of financial advice firms, according to a Personal Finance Society survey.
As part of the professional body's 2016 Member Survey, three quarters of financial adviser's identified the impact of regulatory and compliance costs as one of the biggest threats to their business over the next 1-3 years (75%), up from 72% in 2015 and 67% in 2014. It is the fifth year in a row that regulation and compliance costs have topped the survey's list of major concerns facing the financial advice profession.
PFS chief executive Keith Richards said;
"Despite the efforts of regulators and government, through the introduction of the Financial Advice Market Review (FAMR), to assure the sector that it will tackle regulatory barriers and costs in order to help increase access to advice, it is clear there is more to be done through the introduction of tangible change. The barriers created by inefficient and burdensome regulation continue to strangle the personal finance sector, thereby restricting consumer access to the financial advice marketplace, leaving millions unprotected and left to fend for themselves. As the FCA and government continue to consult on key proposals resulting from last year's FAMR, I'd urge them to act on the feedback and pragmatic solutions offered by the sector on how best to address the barriers, and introduce meaningful change which will in turn assist millions of consumers in their long-term life planning."
Brexit and a general economic slowdown was the second biggest threat identified by PFS members surveyed (34%). A similar number of respondents identified execution only and online simplified advice as a major threat to their business (33%), up from 22% in 2015.
Complications from implementing EU regulations (29%) and a lack of new talent/available skilled trainees (22%) were also identified as major threats in the short term.
More than 1,600 PFS members responded to the professional body's 2016 Member Survey, which was conducted between 11 October and 8 November, and asked a series of questions about PFS services and the general business and economic environment.
Opportunities arising from the Government's pension reforms were considered the biggest opportunity for advice firms in the next 1-3 years (59%), followed by referrals from professional connections (48%) and higher professional standards (36%).
While the ranking of the three biggest opportunities remained unchanged from 2015, advisers were much more downbeat about the short-term prospects for economic growth. Just one in five advisers identified economic growth as an opportunity for their business in the next 1-3 years (21%), down from 40% in 2015.
This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.