In December last year, the society warned the public to be on alert to guard against the inevitable wave of non-regulated ‘scammers’ who would try to take them unawares under the pension reforms.
Richards said:
“The increasing danger of consumers finding their way into unregulated activity is worrying. It is now time for all activity to come under the same umbrella, to provide consistency of standards and consumer protection.”
Richards asserted that the public generally don’t understand the difference between regulated and unregulated activities and in fairness should not be expected to. They are therefore more exposed to scammers, fraudsters and opportunists who often look like regulated firms or processes.
He added:
“It is in everyone’s interest to regain public confidence in the financial services sector. Accordingly, we are calling on the Government to play their part in bringing about change, to both better serve the public and encourage a shift back to a savings culture.
“Consumers logically assume that all financial and investment activity is covered by the appropriate supervision and regulation, but this is not the case. It is perhaps also time to undertake a broader review of regulation to ensure that it does not actually drive firms to develop non-regulated solutions to avoid regulatory cost and risk.”
Richards also pointed out that whilst a ‘free’ non-advised service might at first seem cheaper when compared to regulated professional advice, hidden commissions and other charges often make it far more costly in the longer-term.Restricting transparency of cost to regulated advice only will drive the public towards the wrong solutions to meet their needs.
Richards concluded:
“The advice profession continues to make good progress since RDR and it would be disastrous to see that undermined when reforms offer a unique and positive opportunity for greater consumer engagement. Now seems the perfect time to create a level playing field and avoid the danger of poor consumer outcomes arising in the future.”
