Reflecting on 40 years of Change: The Compliance Journey

Published:  July 2024

MM Wealth has now been trading for 40 years.  As part of our anniversary celebrations, we thought we’d take a look from a compliance perspective, as to how events have affected the regulatory landscape over this time period; such as significant political events, advancements in technology and financial crises and how MM Wealth have responded to this over the years.  Here is a breakdown by decade – it makes for interesting reading!

In the 1980s there was a governmental push for deregulation under Margaret Thatcher’s leadership.  As a result, the Financial Services Act 1986 was introduced – a pivotal shift in our industry and changes encouraged increased competition along with the need for a more structured regulatory framework as new financial products and services emerged.

In the 1990s, regulatory framework began to be addressed in the UK with the creation of the Securities and Investments Board (SIB).  Self-regulating organisations (SROs) were established as an important move towards a more comprehensive regulatory environment.  Additionally, the Financial Services and Markets Act 2000 (FSMA 2000) was implemented; key preparation for the financial regulation that we recognise today.

The tech boom and bust and global financial crisis of 2007-2008 featured in this decade and as a result, the FSMA 2000 was strengthened, and the Financial Services Authority (FSA) was created to oversee the sector. The Markets in Financial Instruments Directive (MiFID) was introduced in 2007 with the intention of impacting upon financial regulations across Europe.  Further reforms followed to help enhance market stability and consumer protection.

The Retail Distribution Review (RDR) in 2012, was the biggest reform programme that the UK financial services industry had seen for many years.  First announced in 2006, it actually came into force on 31 December 2012.  With this legislation came the requirement for financial advisers to be qualified with a QCF Level 4 qualification.  Our financial planning team far exceeds this minimum requirement as they are all Chartered Financial Planners, in addition to the company holding the Chartered firm designation since 2016.

Post the financial crisis, there were additional regulatory reforms and the FSA was replaced by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) in 2013, marking a new era of regulatory oversight.  The introduction of MiFID II and the General Data Protection Regulation (GDPR) in 2018 further aligned UK regulations with international standards, significantly strengthening consumer protection and data privacy.  At MM Wealth, we are dedicated to ensuring that our processes and procedures meet the stringent requirements of our highly regulated profession by continually upskilling our in-house Compliance department.

Regulations continue to remain dynamic in the 2020s to account for Brexit and the increased impact from digital finance and fintech, including frameworks to cover cryptocurrencies.  Covid obviously also highlighted how a remote working environment in our line of work must remain compliant.

The latest significant regulatory change is Consumer Duty, a landmark regulation introduced by the FCA in July 2023.  This again provides more protection for the consumer, ensuring financial service firms prioritise consumer protection, meet strict standards and deliver fair value and outcomes.  This is something we fully endorse and have always strived to achieve for our clients.

We should expect compliance to remain an ever-changing landscape.  We’ve recently seen many consolidations take place as firms are unable to meet the regulatory requirements and adapt as required.  However, this is not an avenue that we intend to go down with the business.  MM Wealth has always been 100% independently owned allowing us to be flexible, dynamic and personal in our approach.  We are not tied to any third-party provider, financial products or services, and we can provide objective, impartial advice that is in your best interests.

At MM Wealth we always strive to stay ahead of the curve, and have found as a result that we prepare and already have the framework in place to be able to incorporate new regulatory developments as they are introduced.  We continue to have a dedicated in-house Compliance team which many firms of our size do not have.  We also work with external Compliance consultants for more specialist advice who we reach out to for further support.

The moral of the story is to never be complacent about compliance!  The past 40 years have shown massive changes and we expect these to continue.  Ensuring we are prepared and adaptable remains key.  By embracing these changes, the UK financial services sector can continue to thrive in a dynamic and evolving regulatory landscape.

We are always here to help you with any questions or concerns you may have.  If you would like to talk to one of our Chartered Financial Planners, please contact us on 01223 233331 or email info@mmwealth.co.uk.

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Disclaimer

Opinions constitute our judgment as of this date and are subject to change without warning.  The value of investments and the income from them can go down as well as up, and you may not recover the amount of your original investment.

The information in this article is not intended as an offer or solicitation to buy or sell securities or any other investment, nor does it constitute a personal recommendation.