The underappreciated UK regulatory structure

In my first post on this platform, I shared the slightly unusual journey that took me from being a scholarship athlete in the US to an apprentice IFA in Wimbledon. Four years in America gave me plenty of insights, but nine months back home studying and working in the UK have reshaped how I see our regulatory landscape. And before you roll your eyes, this isn’t another moan about overbearing regulators — quite the opposite. I want to highlight why our system, often criticised, deserves far more credit than it gets.

When comparing the UK and the US, it’s fair to say American regulators have traditionally taken a lighter-touch approach, often stepping in only after disaster has struck. By contrast, the UK has always favoured a firmer hand, with consumer protection at its heart. I’ll admit that when I started out, I saw this as needless red tape and blamed it for the steady trickle of capital heading across the Atlantic. But the more time I spend in the industry, the more I see the wisdom in prioritising savers’ life savings over the convenience of firms. After all, the real cost of “light touch” is often borne by consumers who never asked to take risks they didn’t understand.

Take mystery shopping as an example. The FCA deploys undercover ‘clients’ to test how firms handle real-world scenarios. It’s a proactive approach that helps the regulator spot problems before they spiral, rather than after the damage is done. By contrast, in the US, this kind of scrutiny usually comes only after a scandal has already left clients high and dry, forcing them into stressful and costly legal battles. Prevention, as the saying goes, is better than cure — and nowhere is that truer than in financial services.

Of course, the UK system is far from flawless. The emphasis on consumer protection inevitably narrows the pool of clients that advisers can serve, particularly at the lower end of the wealth scale. But if the trade-off is a heavier workload for advisers and better safeguards for consumers, I know which side of the fence I’d rather be on.

Next month I’ll be exploring how advisers can square that circle: finding ways to build sustainable businesses while still serving those who need financial help the most.

Photo by Alev Takil on Unsplash