A new study from PIMFA, the trade association for wealth management and financial advice firms, highlights the significant pressures firms face from the cumulative impact of regulatory change, with a clear call emerging for greater clarity, consistency and proportionality from policymakers.
The inaugural PIMFA Regulatory Insights Tracker, which surveyed 52 of its member firms, shows that while the sector recognises the importance of proportionate regulation, the volume of reforms and lack of clarity in communications are having a significant impact on day-to-day operations. The sector, which manages over £1.65 trillion in private savings and investments, is clear that greater regulatory clarity and consistency are essential if firms are to continue supporting clients and contributing to long-term UK growth.
Nearly all respondents (96%) agreed that regulatory change is diverting time and resources away from other priorities, with almost a third (29%) stating that this is happening to a “large extent”.
When asked which regulatory priorities should be at the top of the agenda for the next 12 months, a majority (54%) of firms pointed to the need for clearer and more consistent regulatory communication, ahead of simplified reporting and reduced duplication of returns (48%).
Compliance costs are also front of mind, with almost eight in ten (79%) firms reporting an increase in compliance expenditure over the past 12 months. While a narrow majority (54%) said they now feel clearer about what is required to remain compliant compared with this time last year, nearly half (46%) still do not feel clearer about how to best remain compliant with regulatory requirements overall.
The Tracker also reveals the extent to which Consumer Duty is dominating firms’ compliance activity. More than four-fifths (85%) of respondents said it was the requirement demanding the single most time and attention, followed by customer vulnerability (52%). Looking ahead, just under four in ten (39%) agreed that proposed changes around Targeted Support and Simplified Advice would help their firm deliver better outcomes for more customers.
David Ostojitsch, Director of Government Relations and Policy at PIMFA, commented on the findings: “The wealth management and financial advice sector plays a critical role in supporting households, businesses and the wider economy, managing over £1.65 trillion in savings and investments. These findings indicate that while our members are committed to delivering the best possible outcomes for clients, the cumulative impact of regulatory change is making it harder for firms to do so, while juggling other priorities.
“There has been real progress in some areas, and we welcome the work the FCA are doing to improve this burden for firms, but there remains more to do. In line with its desire to be a smarter regulator, we need to see a regulatory framework that is simpler, more proportionate and more consistent for firms to thrive and continue supporting long-term growth in the UK economy.”
The Regulatory Insights Tracker marks the first in a new series of regular surveys designed to capture member sentiment towards the regulatory landscape. This inaugural set of results provides a benchmark view of how firms are experiencing and responding to the current compliance environment, and will inform PIMFA’s ongoing policy and advocacy work.
