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Bloom: RDR will dismantle UK`s system of advice
Date 26/08/2011 13:45  Author webmaster  Hits 2580  Language Global
UKIP MEP Godfrey Bloom slams the RDR [Retail Distribution Review] as scandalous and predicts a "financial armaggedon" over confluence of EU and UK regulation. He is interviewed by Cara Waters from FTAdviser

Godfrey Bloom, UK Independence Party MEP for Yorkshire and North Lincolnshire, was in typically robust form as he discussed the prospects of the financial services sector, predicting a "financial armageddon" stemming from problems in the eurozone and the imposition of the RDR.

Mr Bloom, member of the European Parliament's Economic and Monetary Affairs Committee, said: "Just at the time when people are desperate for financial advice, the government is dismantling the United Kingdom's system of financial advice which is utterly scandalous.

"I have written to the Financial Services Authority, I have written to Hector Sants, I have written to Mark Hoban - I have written to anybody and everybody.

"Why is it for politicians to suggest how you should be remunerated as a financial adviser, how can that be the responsibility of the politicians?

"If I choose to pay for advice this is my own judgement, it is not for politicians to decide. In a free society we should not have government's imposing these decisions on us."

The MEP has campaigned vociferously against the RDR and has previously posed parliamentary questions and made an appeal to the Human Rights Committee, which was rejected. However, he claimed he will not give up the fight.

He said: "I intend to take it up again. What I don't understand is, if there is going to be a financial services regulatory procedure that will emanate from Brussels, which clearly there is, why anyone would work under the current system, which is so hostile to the small independent adviser.

"You would be much better passporting your way and setting up a company in Brussels or Paris and operating under that regulatory procedure."

Regulatory reform

Mr Bloom, a famously outspoken eurosceptic, advocated a "sensible" financial regulatory system run from London.

He said: "This would include a total abolition of the FSA and bringing people back who can regulate with a light touch. What makes me laugh is when politicians say we have already had light touch regulation.

"We have had extremely heavy regulation. We have had unbelievably complicated regulation. We have had unbelievably expensive regulation which has not done any good.

"The problem is that it is the wrong sort of regulation - it is box ticking, it is prescriptive, it has not saved a single company from going down, it has not saved a single client from distress."

Mr Bloom is strongly critical of the role of the FSA and cynical about the impact of the proposed regulatory changes in the UK.

Mr Bloom said: "There is no court of appeal; the FSA interprets its own fines and imposes its own regulations. There is over four million words of regulation and nobody understands it, least of all the people who work for the FSA, they are not qualified.

"What they will do in Canary Wharf is they will simply change the name over the door. You will not find any new people, it will just be more of the same."

Mr Bloom warned any new regulatory structure would also have to engage with regulation from the EU.

He said: "I am assuming the EU is still here but it is not impossible that the EU is going to break up as it has never had grass roots political support.

"You could say it is already breaking up, if you look at the total destruction of the Maastricht treaty that they broke when the Greeks joined. Countries allowed in were supposed to have debt of 60 per cent of GDP, but they let in all these countries running 120 per cent deficits.

"The major breach they have made in the last year was bailing out countries, which is totally against the Maastricht treaty, and the sale of eurobonds or sovereign debt of junk status, which was also against the Maastricht treaty.

"We have seen all this before in 2008 in the private banking sector and we are now seeing it take place in the central banking sector. None of this can keep going for much longer so we are going to see some form of armageddon in the markets."

The future

Discussing the general economic climate, Mr Bloom said that he is pessimistic about the economic situation in Europe and in the UK.

He said: "There is no way out of the problems we have at the moment and they are coming in every single direction.

"The budget deficits are out of control in the United States and they are out of control in the UK. The European Central Bank is desperately exposed to peripheral debt, for which it is going to have to pick up the tab.

"We are really dealing with major trading blocks which are insolvent, so the United States is insolvent, the eurozone is insolvent and the UK is insolvent."

Mr Bloom said that he was also pessimistic about the continued survival of the eurozone and, perhaps unsurprisingly, the EU.

He said: "I would argue the only way it could continue is as it is, is as a complete and total fiscal union such as the United States, but I cannot see this as politically acceptable.

"I do not see why as a German you would you see your taxes go to Greece where they do not collect taxes and there is virtually a political breakdown in the system.

"It could be that Germany leaves or the peripheral countries break off, that is an option. This whole experiment was doomed from day one. The people who forced this currency union through should be held culpable."