“We live in a cynical world and we work in a business of tough competitors,” says Jerry Maguire in the film of the same name. Jerry was right. We live in a cynical world and that’s one thing I like about it.
Of course, this means that any noble gesture is immediately categorised as being self-serving or having an ulterior motive. Cynical people like myself cannot bear to think that others carry out kind gestures with no thought of and advantage to themselves.
So it was with a large dollop of cynicism that I greeted the recent news regarding the fees mortgage brokers will have to pay the regulator in 2007/08. At last, it would seem there’s good news for smaller broker firms from our friendly neighbourhood Financial Services Authority.
Late last month, the FSA published its annual fees and levies document. Lo and behold, the minimum fee for brokers has been reduced from 699 in 2006/07 to 650. Also, the fee for the Financial Ombudsman Service will remain at 50.
I feel dizzy with excitement – is this the regulatory dividend we’ve heard so much about? Are firms finally being re-warded for delivering compliant business, for getting to grips with the raft of regulation that has been dumped on them, for quality record-keeping, for continuing to provide a professional service and, as one colossus of mortgage journalism puts it every week, ‘doing right by your client’?
Well, no. This isn’t the first payment of the regulatory dividend at all. It’s all down to an increased number of firms in the A18 fee block, meaning the budget can be spread across more firms, delivering smaller fees for all.
While I don’t wish to be negative about something that will save smaller firms money, the point needs to be emphasised that nothing advisers have done over the past year has contributed to the reduction. The FSA’s gargantuan budget for the year ahead has topped 300m for the first time. There is nothing to suggest it will drop below this, in the short term at least.
Therefore, firms can continue to do everything expected of them by the FSA, including buying into the move to principles-based regulation, which alone will cost an estimated 50m, and still will not benefit from a nice little earner from the watchdog.
There’s a school of thought which suggests that the longer statutory regulation is in place, the more firms will get used to what is expected of them. This means the regulator needs to be less interventionist and ultimately the need for regulation declines. It becomes business as usual for firms.
Now I’m not suggesting that brokers are at a point when regulation has become second nature to them, but we’re nearly three years in and it should be a fact of life. Many commentators have suggested that a huge amount of enforcement action by the FSA is just around the corner, but they’ve been saying that since Mortgage Day. It hasn’t materialised.
Instead, what we see are thematic reports suggesting that smaller brokers have a lot more work to do. I appreciate that the industry has a regulator more inclined to give firms time to turn things around rather than censure them immediately, but if they were really that bad, surely the FSA wouldn’t allow them to operate.
My assumption is that on the whole brokers are doing what is expected of them, so we’re not too far away from business as usual. If this is true, the dividend shouldn’t be that far off either.
But I don’t believe this for a second. Regulators regulate. It’s what they do. We have a European Commission intent on regulating everything as well as the FSA. This process keeps people in jobs, regulators in business and dividends as something akin to pie in the sky.
So enjoy the 49 saving. Call me cynical, but don’t bank on getting it every year.
Blaming the parents is unfair
In days gone by, right-wing politicians used to moan about the size of the Nanny State and continually ask whether the government could continue to provide support for individuals from the cradle to the grave.
Nowadays, it’s not so much Whitehall that fulfils this role as parents. While parents of teenagers in particular might like to return to the good old days when you could put your children ‘down t’ pit’ as soon as they had hair on their top lip, this situation won’t be repeated.
Instead, parents must budget for a life in which they will never see the back of their kids, financially at least. This is written from the point of view of someone with no ankle-biters to worry about, but I’m not so heartless as to think that parents don’t care about their children or want them to leave home as soon as possible. Of course, most parents would do everything they could to help their offspring, especially if it meant they could get their 30-something children out of the family home.
Therefore, it surprises me that we’re all so cynical (there’s that word again) about the bank of mum and dad. Headlines such as ‘Parents push up house prices’ seem wide of the mark.
What do we expect them to do if their kids ask them for money to help them buy a home? Send them to their room with no dinner?
Let’s be realistic. As the Council of Mortgage Lenders’ recent research has pointed out, parental help in buying property has always been a factor. It may be more prevalent now because of rising house prices, but we shouldn’t castigate parents for helping out their children.
And on that note, Happy Father’s Day, Dad. Please send the cheque immediately.
It’s a cynical old world
With the all the sparkling repartee of Bernie Winters and Schnorbitz, I deliver – Is it just me or is there too much cynicism in the world?