If you are the kind of geek who enjoys reading the new pan-European language, Bureaucratese, then the FCA is the gift that just keeps on giving. There is never, ever going to be a dearth of perplexingly opaque literature to scratch one's brow over. Almost every week, a new instalment of the genre is exuded, like nectar out of the rear ends of aphids. Very soon, David Attenborough will be fronting documentaries on the subject, given that regulation appears to have attained the kind of intrinsically purposeless character of any naturally occurring phenomenon. Within the cosmic scale of things, it just is.
One of the latest examples of this output is Feedback Statement FS19/04, entitled Fair Pricing in Financial Services: summary of responses and next steps, which was published last month. I was feeling slightly ashamed that it took me this long to catch up with it, as 'Fair Pricing' seems to be an important issue, one which I (and our Members) would be keen to be thinking about. How wrong I was.
Firstly, there's the issue of style and substance. The two qualities are, of course, inextricably linked. The document consists of twenty-eight pages, including the all-important glossary. Whilst broken up into four main chapters, the content takes the form of numbered paragraphs. There are a lot of them, and there's a great deal of repetition of the same phrases. The language employed seems to be quite deliberately unspecific, so as one works one's way through it, there is a sense of a kind of recurring encounter with something vague, as if one were a goldfish swimming through murky water in a circular fashion around one's bowl. However, because the content is laid out as discrete numbered paragraphs, there is nothing there that resembles anything like a sustained argument. If you feel that pursuing a line of logic, in order to establish (a) principle or (b) application is of value, you're going to be disappointed.
Secondly, there is the clear lack of specificity in application. As with most FCA publications, the language is couched in the most generic terms possible, so that it might be said to have some kind of relevance to every conceivable category of regulated entity, if only you could work out what that was. The end result is a document which exhausts the reader with its verbosity, whilst at the same time withholding enlightenment. I have spent an unconscionably large proportion of my life reading this stuff, and I am noting an increasing sense of desperation as I work my way through these publications: surely, there must be some point at which the relevance of all of this must become apparent? I gave up after reading it twice through and concluded that I will pin my hopes on the FCA's follow-up work.
Thirdly, there's the use of a very particular kind of jargon. In an attempt to edify readers, I have extracted the Glossary which you can download from the links below. It does seem, from an initial review of the use of terminology, that very little of what the FCA is talking about could ever apply to IFA firms, which are framing very specific kinds of financial-planning services, to suit their own clientele, where every penny of charge has to be justified and reported. I have concluded that when the FCA is talking about 'fair pricing', they're not thinking about what we mean by it - which is an intentional pricing strategy, based upon (a) the nature of the assignment, (b) the real cost of delivery and (c) clearly-defined outcomes for both client and firm.
Fourthly, this paper reinforces the perceived reality of a worldview discontinuity which has opened up between the FCA and those it regulates. Para 2.7 mentions that "some pricing practices may exploit situations where consumers are unable to respond appropriately to price change", and laments that such groups are "being unfairly penalised". In practical terms, that does seem to almost perfectly describe the circumstances underpinning this year's FCA fee hike.
There is more to be said about this, no doubt. In the meantime, I remind ValidPath Members of our own Guide to Fee-Based Advice, and supply two supporting documents in the pick-list below:
Glossary (104.9KB)
6-evidential-questions-to-help-assess-concerns-about-fairness-in-price-discrimination-info (207.6KB)
This week's bonus video:
Kevin Moss, 15/08/2019
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