"We want to see the creation of a new regulator, separate from the FCA, to provide more accountability, at a cost that is appropriate for the industry it regulates,” said Heath, a former director general of the IFA Association.
“We need a regulatory regime designed to give the advisers’ clients a value-for-money product which they can understand,” he said.
Earlier this month the Treasury and the Financial Conduct Authority (FCA) began consultations with the industry to gather input on the widening gap between the advice consumers are prepared to pay for and what the industry can afford to provide.
It is also looking at whether there are any regulatory barriers facing UK advice firms, and is covering the full scope of retail products in the financial market, including pensions, savings, mortgages, and insurance.
Heath told International Adviser in an interview that it would better for advisers and the consumer if the industry had its own professional regulator that incorporated the industry compensation scheme for malpractice and the ombudsman’s role.
“A new regulator could mean industry specific oversight and the creation of a cost structure that will allow firms to grow and flourish.”
“If an insurance company or bank has transgressed all it has to do is move money around its balance sheet to pay a fine. If you do that to an IFA, he loses his house.
“So we’re hyper sensitive about the cost of regulation and where it’s going. Frankly we don’t give a damn what regulation is being foisted on the banks.
“We need to have our own regulator, which is targeted on the professionals in the industry and is integrated, so the regulation and ombudsman and everything else works in parallel because that way you can cut costs,” he said.
The Libertatem director general was author of the Heath Report 2, which found that 13,500 advisers left the industry following the introduction of the Retail Distribution Review (RDR) at the beginning of 2013, which meant that around 16 million consumers lost access to invaluable financial advice.
He said the number of IFAs is expected to keep declining as a lot are likely to retire in coming years and many IFA firms are reducing the numbers they hire.
“A new regulator could mean industry specific oversight and the creation of a cost structure that will allow firms to grow and flourish,” he said.
“We call on the adviser community to respond to support Libertatem in its efforts to create a truly accountable and effective adviser sector for all,” he said.