The New Twin Peaks Model study, released by global law firm DLA Piper and accountancy group BDO, also showed that asset managers are the most worried by looming changes to the UK regulatory system.
According to the research, intermediaries are less aware than other financial services providers how ‘twin peaks’ regulation through the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) will affect them.
Intermediaries’ greatest concerns were the FCA’s ability to make enforcement actions public at an earlier stage, increased competition powers and product intervention powers. All were cited by 84% of respondents as being areas of the highest potential impact.
Michelle Carroll, head of asset management at BDO, said: “Retail intermediaries’ concerns are what you’d expect to see from somebody who deals with retail clients.
“They are sensible [concerns] but what worries me is the low numbers. I think these says that retail intermediaries aren’t really engaged yet with the impact of the changes in regulation.”
She added: “When we first got the survey results back … this lethargic response just didn’t make sense. We concluded that this inability to clearly highlight and prioritise what impact the significant regulatory changes would be was due to what we termed ‘regulatory fatigue’.”
Carroll argued that regulatory fatigue is being caused by the sheer number of new regulations such as RDR and Fatca, constant changes to the deadlines and specific rules of these regulations, and an inability to deal with what needs to be done now to prepare for them.
When asset managers were polled, a larger proportion of the sector highlighted areas of regulatory change that have a high chance of affecting their businesses.
Some 91% said the FCA’s increased focus on culture within firms is a high or medium concern, while 87% are worried by early publication of enforcement actions.
Six issues – increased disclosure powers, new investigative powers, the PRA’s focus on culture, greater competition powers, powers of direction over unregulated holding companies and directing firms to withdraw misleading financial promotions – are joint third areas of concern, each being cited by 81% of asset managers.
“Generally, this tells me that the asset management community is worried about lots. That is possibly an ineffectual approach,” Carroll said.
