MPs back calls for 'fiduciary duty' on all firms

I don't understand

Every IFA I know already stands by these duties to their clients both because the regulator requires it and because they voluntarily subscribe to these standards. Who is this really aimed at?

Posted by: Nick Bamford

Law of agency?

It used to be called the 'law of agency' and you were either the agent of the client or of a supplier (provider). Wiki defines the duties thus; Duties An agent owes the principal a number of duties. These include: a duty to undertake the task or tasks specified by the terms of the agency (that is, the agent must not do things that he has not been authorized by the principal to do); a duty to discharge his duties with care and due diligence; and a duty to avoid conflict of interest between the interests of the principal and his own (that is, the agent cannot engage in conduct where stands to gain a benefit for himself to the detriment of the principal). An agent must not accept any new obligations that are inconsistent with the duties owed to the principal. An agent can represent the interests of more than one principal, conflicting or potentially conflicting, only after full disclosure and consent of the principal. An agent also must not engage in self-dealing, or otherwise unduly enrich himself from the agency. An agent must not usurp an opportunity from the principal by taking it for himself or passing it on to a third party. In return, the principal must make a full disclosure of all information relevant to the transactions that the agent is authorized to negotiate and pay the agent either a prearranged commission, or a reasonable fee established after the fact. Doesn't all this still apply to IFAs as well as FSA rules?

Posted by: Stanley Kirk

Really?

Absolutely right Nick and what exactly does 'not profit from the client' mean? That needs a bit of clarification.

Posted by: Stephen Cooper

Bust

If I'm not allowed to profit from my clients then I predict my business will last approximately 2 months. Is it me or has the Government and regulator between them destroyed financial services?

Posted by: Soren Lorenson

Adam Smith

I googled Adam Smith, chairman of the FSCP to see who is is and got the following:- 'As well as being Chair of the Consumer Panel, Adam also Chairs the Professional Standards Committee of ESOMAR the world association for professional researchers. This group is responsible for administering and enforcing the ICC/ESOMAR ethical code for market, survey and opinion polling research. This code regulates the conduct of surveys in most countries in the world. Adam has his own consultancy firm, Real Research, and works for a number of organisations including the European Commission. Positions held in the past - Adam has been managing director of AGBNeilsen Media Research UK, managing director of Euroquest, deputy managing director of BMRB, managing director of Mass-Observation and CEO of Winona Research in the USA. He has also worked in Research International and Unilever. He is a Fellow and past Chairman of the Market Research Society. Recent, non-financial sector, work includes writing the global guidelines for out of home audience measurement and revising the worldwide code on opinion polling. Adam has also been a member of the Press Complaints Commission. Reasons for joining the Panel - Much of Adam’s career has been spent working in an area which is now known as Behavioural Economics. He applied to join the Panel because he feels that his knowledge and experience of the behaviour of people and markets is very relevant to advising the FSA on regulation and its impact on people who use the financial services industry. Areas of particular interest on the Panel - Being Chair of the Panel involves engagement with the whole of the Panel’s work. However Adam has focused particularly on improving the effectiveness of the FSA and on ensuring that the Retail Distribution Review encourages more saving and delivers better value for the customer. The FSA has changed a great deal as a result of the financial crisis and the decision to move away from light touch regulation. Adam believes the Panel has a central role to play in helping to ensure that the changes being made by the FSA as a result of the financial crisis will improve the fair treatment of the industry’s customers, as well as ensuring the future stability of the financial system.' The last paragraph caught my attention, particularly the bit about ensuring the RDR encourages more savings! '

Posted by: Stephen Cooper

Bureaucrat speak.

Nick, Soren and Stephen. Exactly. Clarification please. It seems that the FSCP has caught the Regulatory disease of speaking in code. Why or why can't all these bureaucrats, politicians, jobsworths and assorted luvvies lean to say what the mean and mean what they say. I call for all of them to speak in plain language. Judging by what many of us understand from past history the FSCP expects us all to be charities, but then what do you expect when the majority of those on the panel have never ever run a business of any sort.

Posted by: Harry Katz

Law of Agency?

As well as FSA regulation, are IFAs also not subject to the general law of agency and always have been? Or did that get abolished somewhere down the line? According to Wiki, the law of agency standards are much the same as fiduciary standards; Duties An agent owes the principal a number of duties. These include: a duty to undertake the task or tasks specified by the terms of the agency (that is, the agent must not do things that he has not been authorized by the principal to do); a duty to discharge his duties with care and due diligence; and a duty to avoid conflict of interest between the interests of the principal and his own (that is, the agent cannot engage in conduct where stands to gain a benefit for himself to the detriment of the principal). An agent must not accept any new obligations that are inconsistent with the duties owed to the principal. An agent can represent the interests of more than one principal, conflicting or potentially conflicting, only after full disclosure and consent of the principal. An agent also must not engage in self-dealing, or otherwise unduly enrich himself from the agency. An agent must not usurp an opportunity from the principal by taking it for himself or passing it on to a third party. In return, the principal must make a full disclosure of all information relevant to the transactions that the agent is authorized to negotiate and pay the agent either a prearranged commission, or a reasonable fee established after the fact.

Posted by: Stanley Kirk

Deep Pockets

Harry we are a charity we regularly give to the following beneficiaries FSA FSCS FSCS part 2 MAS PI Insurer EL Insurer Office Insurer Office rental rates Compliance HMRC Gas & Electricity companies Water company BT I could go on but you get the drift. The FSCP, however, will persist in the myth, that we are raking in eye watering amounts of commission all of which we use to fund a lavish lifestyle. FSCP should get the regulator to rein in its costs which would immediately benefit consumers. Apart from having a rant, we already have a fiduciary duty towards our clients.

Posted by: lol

More Rules More Regulation More Red Tape

Just keep piling the regulations on top of the rules on top of the red tape. Eventually we will all be drowned in the stuff and then they will be happy. Last one out the industry please switch off the lights!

Posted by: Bob Donaldson

Who is this aimed at

I don't think this is aimed at IFA's or Brokers I believe it is the precurser to creating the divide between investestment banks clearing banks. It is just such a shame that MP's of all party's have no concept of what goes on in the real world so come up with these dumb statements. Any business that did not look after its customers would not exist, unlike any usless MP who fiddles their expenses at the expense of the taxpayer and thinks he/she is innocent. Any they wonder why their reputation is so low?

Posted by: Robert Marshall