The Association of Professional Financial Advisers (Apfa) has called on the incoming Financial Conduct Authority (FCA) to impose more market focused regulation.
In its response to the Financial Services Authority's (FSA) consultation paper 'Journey to the FCA', the trade body said the FSA had not paid enough attention to the effects of its regulation on the industry or consumers.
Chris Hannant (pictured), policy director at Apfa said: 'Apfa believe the competition objective for the FCA should lead to it taking a more market oriented approach. In the past too little regard has been paid to the cumulative effect of regulation on both consumer outcomes and the profession as a whole.
'It is incumbent upon the FCA to ensure that we have a regulatory regime that, whilst protecting the consumer, leaves room for one of the UK’s most successful industries to grow and prosper.'
Apfa also said the FCA needed to succeed where the FSA had failed and manage the balance between confidentiality and transparency, including in its dealings with Capita for Arch Cru.
The FSA censured but did not impose a £4 million fine on Capita for its failings in relation to the Arch Cru funds. Although Capita contributed to the £54 million payout alongside BNY Mellon and HSBC, the FSA still has not published the reasons why it believes the amount to be fair.
'The Arch Cru settlement with Capita and others is a prime example of the regulator making decisions that have a significant impact on the market but with little transparency. The FCA must do better in this regard and be willing to disclose more details of these decisions,' Hannant said.
The trade body also called for clear exoneration for firms who are issued with warning notices only for the FSA to find no evidence of wrongdoing.
Hannant said: 'In two-thirds of cases potential enforcement is not publicly concluded, which can result in firms bearing an inaccurate ongoing slur against them. The FCA should introduce a clear process that will make it explicit that firms are exonerated when it is concluded that no wrongdoing has taken place following a warning notice.'