E = MC² may be Einstein’s most famous quote but it has since been proven wrong. However, the same is not true for his second most popular quote –‘the definition of stupidity is to do the same thing over and over again and expect different results’.
Undaunted, the FSA are setting out to prove him wrong again. Despite all their previous attempts to regulate safe outcomes for the purchasers and almost two years before their latest attempt – RDR – actually hits the streets, they’re off again with a new consultation to correct the perceived problems in the financial services sector post RDR, an environment that doesn’t exist yet.
Their can’t be many organisations who set out to correct the mess left by their own actions before those actions have actually been implemented – rather like giving your decorator instructions to paint the room and then going out to pick some wallpaper before you see the effect he achieves.
And so where does their challenge to Einstein come? Well the brainy boys and girls in Canary Wharf have decided that, having regulated the sales process, the educational levels of the advisers, and the compensation approach allowable, and having seen (or imagined in the case of RDR) the failure of that approach, that what is needed now is ... a new set of regulations on the products themselves.
With that level of optimism that one more regulatory load will suceed where all the previous regulatory loads have failed, the FSA crew certainly have to be admired for their ability to keep hammering away at the wall of consumer detriment with the rubber mallet of regulation.
Meanwhile, the poor consumer has to try to purchase his or her products in the face of unrelenting news from the regulator that the market is failing. – what else can the intelligent person assume when the regulator feels the need to keep adding new rules.
And each time the consumer pulls away from financial products and stops saving, the regulator seems to feel this is because of the dastardly machinations of the IFAs or the product providers and never feels it might be due to the endless warnings emanating from the ‘consumers champion’ that the market it’s responsible for is dodgy.
The latest brainwave from our regulatory overlords has been kicked off with a discussion paper on the need to regulate product design . In their own words, “ to intervene earlier in the product chain if necessary, to anticipate customer detriment and choke it off before it occurs”. Confidence inspiring and one has to be impressed by the ‘kick ass’ phraseology.
The document is availalbe from the FSA’s website and they are looking for comments, although given the level of comment on the RDR consultation and the little effect it had, I’m not sure too many people will waste the ink.
In the meantime, I think Albert Einstein can rest easy that his definition of stupidity is under no major threat at the moment.