The impact of regulatory change on retail financial product distribution in the UK
| Published date | 01 March 2003 |
| Date | 01 March 2003 |
| Pages | 71-80 |
| DOI | https://doi.org/10.1108/13581980310810426 |
| Author | Kevin Littler,Robert Hudson |
| Subject Matter | Accounting & finance |
The impact of regulatory change on retail
financial product distribution in the UK
Kevin Littler and Robert Hudson
Received (in revised form): 3rd September, 2002
The International Institute of Banking and Financial Services, Leeds University Business School,
Leeds, LS2 9JT, UK; tel: +44 (0)113 3436860; fax: +44 (0) 113 3434459; e-mail: jkl@lubs.leeds.ac.uk
Kevin Littler is Senior Research Fellow in
Financial Services at the International
Institute of Banking and Financial Ser-
vices, Leeds University Business School.
Robert Hudson is Lecturer in Accounting
and Finance at Leeds University Business
School.
ABSTRACT
The staggered emergence of the new regulatory
regime affecting the distribution of retail finan-
cial products in the UK is leading to industry
players taking strategic decisions under increased
uncertainty. While the debate over the final
form of the regulation continues, this paper
identifies five emergent themes to the proposed
regulatory changes and discusses their potential
impact on product distribution. The paper con-
cludes that the proposals constitute the catalyst
for a wholesale restructuring of the processes
and interactions between the manufacturing and
distribution tiers of the UK financial services
industry, wherein e-business developments may
take on increasing significance. Whether this
restructuring would deliver the consumer bene-
fits desired by the regulator remains an open
question.
THE REGULATORY TRANSFORMATION
OF DISTRIBUTION
As the UK financial services industry
moves increasingly under the auspices of a
single regulatory authority, its participants
have, ironically, been bombarded by the
recommendations of regulatory reviews
from numerous sources and perspectives.
The multiple (some may argue, fragmen-
ted) review approach to devising the new
regulatory framework for the industry has
caused the strategic assessments of industry
participants to be conducted within a
highly uncertain environment. As the reg-
ulatory formation process continues, this
paper considers the collective impact of the
currently proposed changes on the distribu-
tion of retail financial products.
At the start of the new millennium, the
UK financial services industry appears to
have been languishing in a period of
enforced introspection. In March, 2000, the
final report of the Cruickshank Review
into banking services was published.
1
It
proposed a new policy framework for
retail banking. In the 2000 budget the
Chancellor announced the Myners’
Review into institutional investment in the
UK. The review reported in March, 2001,
presenting over 50 recommendations for
the future re-positioning of the activities
and processes adopted by institutional
investors. The report proposed a further
review into the competitiveness of retail
savings — the Sandler Review. Addition-
ally, Spring of 2001 saw the announcement
of the Financial Services Authority’s (FSA)
review into with-profits business and the
introduction of stakeholder pensions which
Page 71
Journal of Financial Regulation and Compliance Volume 11 Number 1
Journal of Financial Regulation
and Compliance, Vol. 11, No. 1,
2003, pp. 71–80
#Henry Stewart Publications,
1358–1988
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