The UK's Financial Conduct Authority is asking the financial sector how it might improve the consumer investment market. It is worried about consumers receiving lower returns than they should because of unsuitable products with high fees but PIMFA, the UK's main private client management trade body, has many other concerns.

The UK has a complex and diverse consumer investment market, with more than 5,000 advisory firms and 27,000 advisors. In its recently-published Business Plan, the FCA said that it was its intention to fight hard to reduce 'harm' in the market. It now wants answers to the following questions.

• What more can the FCA do to help the market offer a range of products that meet straightforward investment needs?
• How can it help people to understand the risks that they are running?  
• How can it regulate financial promotions in such as way as to make it easier for people to understand the protection that regulation can afford them when they invest?  
• What more can the FCA do to ensure that when people lose money because of an act or omission of a regulated firm, they are compensated appropriately by whoever is to blame?  
• How can the FCA or firms (the regulator does not say which) do more to protect people from scams?
• How can the FCA help this market to be competitive?

The FCA’s interim chief executive, Christopher Woolard, believes that there have been too many scams and scandals in the market, with firms offering consumers unsuitable products or advice. He says that he will consider all contributions carefully. He is proud of the FCA's occasional forays into the pension transfer market, its temporary ban on the mass marketing of mini-bonds and its proposals to make the ban permanent. He is also keen to remind the industry of the FCA's ScamSmart campaign which it began in 2014 with the aim of giving consumers information to help prevent them falling victim to investment and pension scams. There appears to be no cut-off date for replies to the FCA's questions and all wealth firms are invited to write in.

Meanwhile, the Personal Investment Management & Financial Advice Association has told this publication that it will, eventually, publish an updated list of its already-numerous grievances in our web pages before it submits its finished letter to the FCA. In early March this year it published a paper that criticised the UK's regulatory regime - and especially the Financial Services Compensation Scheme - in unprecedented detail. Readers can see a report of it here.

PIMFA has welcomed many of the proposals outlined in the FCA's call for evidence – in particular many of the arguments that it makes regarding the current system of pay or "compensation." However, it points out that the FCA ought to realise that every customer who finds himself in need of the FSCS has had a poor result and an incredibly stressful experience and that prevention is better than cure. Tim Fassam, its new director of government relations, told Compliance Matters: "In our view, there remains inadequate supervision of advice firms and this has led to significant market distortion whereby firms that represent the most harm are allowed to default their liabilities onto the FSCS and make prudent firms bear the cost.

“We continue to believe that unless the supervisory regime is fit for purpose, compensation costs will continue to rise regardless of their configuration. It is hard to see how, under the current system, the burden of these compensation costs will not continue to fall on prudent advice firms."

PIMFA has, incidentally, just set up an ESG (Environmental, Social and Governance) Academy, a new online learning facility that offers CPD (continuing professional development) points and is free to members.

PIMFA was formed in 2017 from the merger of the Association of Professional Financial Advisors (APFA) and the Wealth Management Association (APFA).