Even before the Financial Conduct Authority (FCA) had slapped its bright red branding on its Canary Wharf offices, it had been sending a loud and clear message it would not be repeating the mistakes of its predecessor.
No longer would we see the box-ticking approach adopted by the Financial Services Authority (FSA). Instead, we would have a regulator that listened and treated those under its rule as human beings rather than numbers.
That has led to the FCA taking an increasing interest in behavioural economics, the academic discipline which states that not all market decisions are rational.
So far, so ivory tower, and the thought of the regulator using up advisers’ fees to dream up some airy-fairy academic musings is unlikely to be met with a printable response from some IFAs.
But it could potentially lead to some more concrete, and welcome, action. In a paper published on the topic earlier this month, the FCA acknowledged that overloading consumers with masses of information was not always in their interests. ‘There is evidence that extra information may lead consumers to make poorer decisions by distracting them or making them under- or overreact to emotionally charged topics like financial advisers’ conflict of interest,’ it said.
This is not an argument against transparency, but if it leads to a reduction in the masses of disclosure paperwork the FSA has demanded advisers provide clients, it will be a smart move.