FSA HEARTS FINRA
The FSA and their American cousins the US Financial Industry Regulatory Authority (FINRA) have taken an unprecedented step of entering an agreement to work more closely together. Whether this means that they will be able to compare notes on incompetency or even heaven forbid try to learn from each other’s mistakes, we will have to wait to find out. It does however show that maybe, just maybe, that they may be prepared to start listening to outside suggestions. Could this lead to the unthinkable, the mighty FSA one day actually listening to the humble broker? Well one step at a time lads, mighty oaks and tiny acorns and all that.
Well we know that they have a habit of over extending their reach into areas where its not particularly welcome. Towards the end of 2009 a group of prominent Financial Planners were moved to petition US congressional leaders to amend a bill including them within FINRA’s authority. On the surface a strikingly similar situation to the UK General insurance industry being shoe horned into the FSA’s remit. Certainly both bodies have shown an overzealous one size fits all attitude to financial regulation when it is clear that a more refined, considered and cultivated approach is more suited to such intricate industries.
Somewhat ironically it was FINRA’s broker bias that had upset the apple cart with those pesky financial planner fellas who claimed that the “conscious or subconscious conflict of interest could result in a broker bias in FINRA” claiming that their involvement would further “deepen the differences in how broker-associated advisers are regulated versus independent advisers.” Some may argue this could be a positive influence on the FSA, however in my opinion regardless of where the bias lies, there is no space for such an imbalance in any form of regulatory body.
They must remain impartial, whilst understanding the markets they are supposed to serve.
As I and many others have stated many, many times we need an industry regulator that understands Insurance. A generic financial regulator lumping us in with the banks simply will not work. Now these two bloated bodies have established a memorandum of understanding which is intended to establish a stronger framework for regulating the worlds two largest markets.
Of course I thoroughly support the move in principle as an opportunity to further strengthen bonds between these two dominant markets and the intention to ease the exchange of information on firms and individuals under common supervision, is of course a very sensible which reflects the global nature of the industry. However, I cannot help but feel that this is nothing more than a bit of back slapping by two organisations that are causing more harm than good to their respective markets.
Perhaps I am being overly critical of poor old FINRA, but if you will lie with dogs…
The FSA have successfully managed to alienate insurance brokers, insurers, bankers and IFA’s alike throughout their relatively short existence and show absolutely no signs of bucking the trend any-time soon. Can we really be expected to take an organisation seriously when they are currently even failing to run their own business prudently? Figures bandied around of late have indicated that they are limping towards the end of their financial year at an estimated £14m in debt. It has also been suggested that they have indulged in some £20m plus in bonuses. Now tell me that is in compliance with proper standards.
I hope I am proven wrong and that this benefits us on both sides of the Atlantic. However, I see little of value other than raising the profile of two overgrown, megalomaniac organisations, both more concerned with the amount power they hold, than how effectively they use it for the greater good.
I do genuinely hope wrong, but somehow I doubt it.
Source: www.insuranceblog.co.uk
