In 2017, the investment world directly accused the regulator of setting prices.
In 2019, the FCA said it "will act on unfair pricing" across the whole of financial services.
And now that back door into keeping prices under control has been wedged wide open by the consumer duty, as well as by chancellor Jeremy Hunt's message to regulators last year that prices needed to be kept in line.
Indeed, Pimfa noticed the winds of change coming in last year, and said it would have 'something to say' if policy met regulation, and fair-value principles ended up forcing a change in price-setting.
Quacking like a duck
Earlier today (Thursday 22), FT Adviser reported that regulatory pressures are causing more advice firms to consider a value-based subscription fee structure.
This followed a score of financial advice companies stating they would be reviewing their fee structures in the light of CD.
All this looks very much like price regulation. And if it looks like price regulation, sounds like price regulation and smells like price regulation, then I'd bet a tenner that it is price regulation.
(Not sure how price regulation would smell; possibly like the coppery tang of well-handled 2p coins and the leathery aroma of your wallet.)
In 2012, former Financial Services Authority conduct policy boss Sheila Nicoll told Financial Adviser the incoming FCA was not going to be a price regulator. At an event in London in 2013, then FCA technical specialist Rory Percival said explicitly: “We are not a price regulator.”
But 12 years on, consider how the market is reacting, with companies directly addressing fee structures post-regulation, and the FCA stating it will consider how fees meet fair value expectations.
Financial compliance specialists B-Compliant have reminded wealth managers and stockbrokers they have very little time left to fill in the FCA’s latest Section 165 request.
This asks detailed information about firms’ pricing models, client demographics and employee renumeration. It requires data to be collated from a 12-month period, ending September 2023 and disseminated to the FCA in a prescribed format.
According to Vicky Pearce, director of the Manchester-based compliance firm: "The FCA believes firms are still charging for services they don’t deliver and are not providing clear disclosure on fees.
"While it is not a price regulator, it is prepared to force the issue of fair value."
'Forcing the issue of fair value' just waddles like a price-regulating duck to me.
Am I quackers? Let us know what you think in the comments below.
simoney.kyriakou@ft.com
