It will not only be advisers who are expected to promote better consistency and certainty going into 2023, but regulation and the FSCS levy should also follow suit, says Matthew Connell, policy and public affairs director at the Personal Finance Society.
Speaking to FTAdviser about this past year, Connell said that the reaction of the bond markets to the “mini” Budget in the early autumn was so violent that the Bank of England admitted the UK had reached a point where “markets were very unstable”.
He explained this experience reminded many that the context in which an event happens is as important as the event itself.
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Connell said: “Had the mini Budget not occurred against the backdrop of the government ostentatiously distancing itself from advice from the Office of Budget Responsibility and from its own civil servants operating within the ‘Treasury orthodoxy’.
“Had it not occurred at the same time as the Bank of England was starting to unwind quantitative easing; had the government not doubled down on its decisions with promises of ‘more to come’.
“And had not pension funds been quietly becoming more and more dependent on liability-driven investing, the reaction of the markets may have been less violent, and different forces may have been allowed to play out over time.”
This has been a year where narratives mattered, he explained.
From partygate to onshore wind, relatively small events assumed national importance because of how they fitted into a particular narrative about where events were heading.
Connell described that a similar situation existed in the investment space where the Financial Conduct Authority’s new consumer duty did not contain many new prescriptive rules.
He said the consumer duty guidance “echoed existing FCA preoccupations over transparency of charges and oversight by advisers of the whole customer proposition”.
However, in the light of developments in the British Steel Pension Scheme review, the direction that the Financial Ombudsman Service has taken in this area and the interventions of parliamentary committees in conduct issues, “the consumer duty has taken on a what many advisers perceive as an ominous significance towards greater regulatory costs and liabilities in future”.
He said: “In times where apparently small developments can have big consequences, we naturally turn to figures who embody continuity and stability.”
Need for consistency
Connell explained that for the UK and many around the world, HM the Queen embodied constancy and dedicated public service.
“No account of 2022 would be complete without recognising that this past year will always be remembered primarily as the end of an era defined by one of the most recognisable and admired public figures we have ever had,” he added.
“2023 will be defined by those who are looking to build new patterns of consistency and reliability. In the investment space, this is likely to be those who can most effectively articulate the benefits of what they do.”
