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You will be pleased to hear that I have abandoned the debate over New Year resolutions, their usefulness and average duration....

You will be pleased to hear that I have abandoned the debate over New Year resolutions, their usefulness and average duration. Instead I am taking a look at regulation in the UK financial sector, along with a few other things. Regulation? Yes, I can hear you groan, but there is a whole new year ahead of us so we may as well set ourselves up for what may lie in store.
 
For starters, I am expecting things to quieten down with the big banks following changes at the top of the Financial Conduct Authority (FCA). I expect HSBC to resist the temptation to relocate to the US having weighed up the pros and cons of staying with the devil you know or walking straight into the jaws of the US Securities and Exchange Commission. Perhaps the bank’s shareholders have given it a nudge in the right direction and perhaps the departure in September of Martin Wheatley as FCA Chief Executive has put a different complexion on things. 
 
However, there is a time-lag. Mr Wheatley may have resigned but he is still around until the end of this month in a role as “adviser”. Unfortunately, his “shoot first and ask questions later” approach, in my opinion, reminded me of a cartoon I saw a while back. It was about a dictator who revealed to a surgeon that his fist had turned to iron. The surgeon recommended amputation - but what the dictator wanted to know was - how to make it bigger! 
 
This year, I think we need to rail against regulatory strangulation if and when we are confronted by it. We also need to be aware of regulatory creep. I should explain that I am not anti-regulation by nature, but in 2014 the FCA became responsible for consumer credit regulation and in 2016 this will start to impact the commercial lending sector. The FCA has a method of looking at sectors which it believes may cause regulatory conduct issues in the future (i.e. thematic reviews). One of the first to hit our sector will, as I understand it, include taking a look at the remuneration received by brokers for work on behalf of their clients. I think this is a bit rich given the salaries paid by the FCA… around half a million pounds for Mr Wheatley. Admittedly, this is less than the £800,000 plus package awarded to Hector Sants for his woeful performance when he was in charge of the Financial Services Authority. But it doesn’t make me particularly happy.
 
I would suggest that if a broker is solvent and not working to the detriment of his or her clients, what he or she earns has nothing to do with the FCA. It’s for HMRC’s eyes only. We should challenge and confront regulatory creep wherever it seems unreasonable – go to your MP if no one else is listening. But I will park my point on regulation for now, and revisit it during the year ahead, should I find that we are suffering from excesses.
 
Onto other observations for 2016, and UK interest rates… up? Down? I have no idea - but a gut feeling tells me it won’t be up.
 
Commercial property prices might make some headway along with commercial rents. Some solidity might return to commercial property valuations although that is a big ask as in my experience 2015 was the year of down valuation.
 
And my stance on exchange rates and sterling in particular… Let’s put it this way, I am not banking on making my fortune on the foreign exchange markets: there is no crystal ball big enough. A turbulent year ahead is all I can see, especially with nasty conflicts destablising the whole of the Middle East, instability in the Far East and the EU referendum. 
 
Good luck peering into that very thick fog and here’s wishing you a Happy New Year.

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