…as our French cousins would say – in more familiar terms change is the only constant and certainly, with regard to the recent output from the FSA, further changes are on the way.
In a substantial u-turn, the FSA has abandoned its push to keep the Menu and the Initial Disclosure Document (IDD) in place as part of the changes for the new EU inspired Markets In Financial Instruments Directive (MiFID). The new regulations are slated to arrive on the 1st November 2007, with a tranche of changes in the way Financial Services companies have to transact business and the way they communicate with consumers.
The FSA wanted to retain their current regime, but aligned to the ‘MiFID way’. The European Commission rejected the FSA’s request as they considered the UK regulator to be ‘gold plating’ the MiFID concept.
In some quarters the news was greeted by loud cheers – the Menu was not liked and many thought it wasteful and irrelevant – we have yet to see what form its successor will take.
So, the end result is that the FSA has published a new Policy Statement, PS07/06, which defines the new conduct of business rules that will replace all the current COBs – but with time running short, the changes to fit in with the new regime have yet to be finalised and should be published later in the Summer according to the mandarins in Canary Wharf.
The upshot of this leaves the regulated advice market in limbo – the FSA has stated that from November the Menu and IDD are no longer mandatory, but firms should consider continuing to use them until the new rules can be enforced. Some commentators have suggested that during the interim period, adviser firms will jettison the Menu and IDD whilst others are less clear and feel their continued use offers a degree of regulatory ‘insurance’.
Once the FSA has re-assessed their position and produce the next set of rules, what is without doubt is there will be a significant impact to the level and nature of the information and processes used in a regulated sale.
What is clear is that product providers, distributors and solution vendors alike must adopt methodologies that are flexible and can react to the ever-changing regulatory landscape – if you think you’ve got it sorted, inevitably you won’t have six months down the line.
And then don’t forget the FSA’s Retail Distribution Review.
C’est la vie!
