SEC, U.K.'s FSA Eye Further Regulatory Cooperation

This is the fourth meeting in the Dialogue, which began in June 2006. The two agencies have worked together during the financial crisis, such as in promoting the use of central counterparties for clearance of credit defaulat swaps

The FSA has been quite active over the past few years in reforming regulation of financial services in the U.K. Perhaps its most controversial move has been to propose a ban on “independent financial advisers,” or IFAs as they are called, selling any products that pay a commission. There are some 35,000 IFAs in the U.K., and it’s estimated that half are commission-based; the proposed ban would take place at the end of 2012. After that time, in addition to fee-only IFAs, another class of advisors, called restricted, would be able to sell proprietary products.

The language in the FSA’s document proposing the commission change–it was floated in June and comments are due by the end of October–is stark and to the point: “The proposals bring to an end the current, commission-based system of adviser remuneration: we propose to ban product providers from offering amounts of commission to secure sales from adviser firms and, in turn, to ban adviser firms from recommending products that automatically pay commission. Consumers will still be able to have their adviser charges deducted from their investments if they wish, but these charges will no longer be determined by the product providers they are recommended.”