MM SUMMIT 250

Caroline Escott Interview


caroline

Association of Professional Financial Advisers (APFA), Senior Policy Adviser

Caroline works on public policy issues, including the pensions reform agenda, at APFA.  She joined the organisation from Hume Brophy, where she led on their UK financial services policy and public affairs work for trade association clients. Prior to this, she was Head of Government Relations for the UK Sustainable Investment and Finance Association (UKSIF) where she was in charge of the organisation's policy and political relations work, running several high-profile policy campaigns and delivering senior-level advice to the association’s financial advisor, pension fund, asset management and banking members.

Caroline has also worked in asset management and been an adviser to senior parliamentarians in Westminster, providing strategic counsel on financial services and energy issues, as well as working on the Conservative Party campaign during the 2010 General Election. She holds an MSc (with Distinction) in International Political Economy from the London School of Economics, where she graduated top of her year. She was a founding member of the Association of Professional Political Consultants' (APPC) Young Consultants' Committee (YCC) and provides pro-bono lobbying and policy support to Pancreatic Cancer UK.

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The FSCS levy is a common source of frustration for many advisers, but provides valuable protection for consumers - is there a way to reform this and keep both parties happy?

Both APFA and its members have always understood that there must be some redress system in place for consumers who receive poor or fraudulent advice, including when the firm in question ceases to exist or goes bankrupt. 

However, the current regulatory system – and the fees which pay for it – is organised in such a way that good advisers pay for the actions of bad ones, and consumers who make sensible decisions are left to carry the burden for those who made inappropriately risky ones.

This is why we welcomed the FCA’s Review into the FSCS levy and its acknowledgement of adviser concerns about the scale, impact and unpredictability of the system right now.  Although we welcome the introduction of provider contributions and consideration of risk-based levies, more needs to be done to reduce the actual quantum of FSCS claims.  This could include tightening the regulatory boundaries around unregulated products. The high level of compensation is also a clear indicator that more could be done at the supervision and enforcement stages of the regulatory regime – preventing the losses in the first place would be of clear benefit to advisers and consumers alike.


With Brexit now underway, as a result could we see positive changes in regulation of advisers?

In our advocacy work with the FCA and other regulators to reduce the burden of regulation on advisers, it has been pointed out to us that significant pieces of regulation derive from the EU and that the FCA’s ability to minimise or alter this is therefore limited.  One example of this is the various disclosure requirements placed upon advisers.  One might hope that leaving the EU would provide the opportunity for regulators, in the long-term, to tweak regulation in the best interests of UK consumers and regulated firms.  However, I don’t think advisers and others should expect a regulatory dividend in the near future.  Although it will depend on the kind of UK-EU relationship model we end up with, the FCA is still pressing ahead with applying MiFID II and the IDD at the UK level, for instance.

One aspect that is of concern is that Brexit is currently taking up a significant amount of government and regulatory resources.  This means that implementing and monitoring the impact of other initiatives, such as the Financial Advice Market Review, might take a back seat in terms of priorities.  I hope that the FCA’s wide-ranging mission paper and its commitment to Sustainable Regulation in its latest Business Plan – including a review of the Handbook – mean that this will not be the case.


Are restrictions to the lifetime allowance and MPAA preventing true flexibility?

The government has placed great emphasis on the concept of ‘fuller working lives’, with one of the benefits of the pension freedoms being the encouragement of a phased and flexible approach to retirement, where people work reduced hours but take some money from their pension to top up pay.  Unfortunately, the decision to cut the MPAA means that some people who choose to do so may incur a penalty so yes, it does limit the impact of the pension freedom reforms in this way.

Restricting the lifetime allowance is another sign that we need a truly coherent, cross-departmental approach to pensions.  The government says it is keen to incentivise people to save for retirement and initiatives like auto-enrolment have made progress in helping consumers to do so.  Yet at the same time, the reduction in the lifetime allowance penalises those people who have managed to successfully save for retirement.  It would be great to see DWP, HM Treasury, BIS and others working together strategically on retirement savings policy issues.


 
Royal London

 

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