The changing face of financial services offshore
Written by Trevor Keidan on March 16, 2015.
The financial services industry across the globe is undergoing some unprecedented changes, in particular with regard to regulation. A number of scandals have bred a lack of confidence in financial institutions and acted as a catalyst to this significant regulatory response.
We are all now well versed in the sorry tale of the sub-prime mortgage crisis which kicked off in 2007 contributing not only to the global recession which followed but also to the collapse in September 2008 of Lehman Brothers, at the time the fourth largest investment bank in the US. In 2012 the Libor rate-fixing scandal broke and a number of banks have been implicated with at least 13 bankers charged with rigging the rate. The same year the Financial Services Authority (FSA) found serious failings in the sale of interest-rate hedging products with the banks yet again in the firing line. Not to mention the Payment Protection Insurance (PPI) mis-selling scandal in the UK which bubbled under during the first half of the noughties, became huge news in the second half and is far from over according to the Financial Ombudsman. The fallout could end up costing banks up to £9bn in compensation payments.
In the face of so many failings on the part of banks and financial institutions, action by financial regulators was inevitable. In the UK a new regulatory regime was put in place in April 2013 with the FSA replaced by two organisations: the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), the former responsible for the conduct of business and markets regulation and the latter for regulating financial institutions.
In Asia the pace of change has been slower however financial companies are increasingly being held to account with Singapore and Hong Kong leading the way to clean up the industry. Singapore’s highly developed and well regulated financial system was praised in 2013 by the IMF as one of the best in the world and the Hong Kong Monetary Authority is introducing reforms to increase transparency in the financial marketplace.
As the head of an Asia-based financial advisory firm I embrace rather than fear regulatory changes, indeed I feel that change is well overdue. For too long, clients within our industry have been badly served, receiving poor advice and service and in far too many cases suffering awful financial losses. There is an undeniable need for financial planners who can help people to plan for the future but there is also a requirement for safeguards to ensure that those giving that help have proper training and are adhering to sound working practices.
The fact is that for those of us working in the financial industry change is coming whether we like it or not. Our choice is stark: embrace change and become an industry transformer or go the way of the dinosaurs. Here at Infinity we have chosen the former!