I must work in a different industry

It was interesting to sit and listen to the AIFA chairman’s comments relating to the FSA at their recent dinner.

I must confess to being very removed from the industry at that point and whilst I am sure the comments made were intended to focus the FSA on certain points they in no way dealt with the real issues we should be dealing with.

For years we have lived in a blame culture and the FSA has had to be involved in that using the appropriate measures.

I listened to the speech and at the end firmly believed that I worked in a different industry and had a completely different relationship with the regulator.

You see the industry regulator has one job – to control risk. It isn’t to promote IFAs or the other peculiar tiers they allowed to mutate under depolarisation.

To control risk you have to apply basic management principles. You identify the stage of competency and apply the appropriate instructions.

Stage one is unconscious incompetent then conscious incompetent, a stage that most people don’t seem to reach. For many, they are the little boys behind the wheel of the car saying ‘vroom vroom’. It is the FSA’s role to regulate them and the others until they make their way through the competency model in every new task.

It is unfortunate that they cannot spend each day with each firm to coach them, and the consequence will be an inevitable situation where those who are at the 4th stage -unconscious competent, will find themselves in the net with the sardines.

I spent some time with FSA officials recently and was motivated by our conversation. They were obviously there to look at us, and measure where we were in a number of competencies. Fine - the more of that the better.

The aspect I liked most was they asked our permission to take the best parts of our good practise and bring them into other businesses. They are highly motivated to bring this industry forward. It is with that in mind that I distance my company from the comments made in the above speech bar one.

If the FSA knows where the risk is, they should apply more and more pressure in the right area, and make sure, that cost, is not passed on IN ANY WAY to those who are doing the job correctly.

They know the risk is in the large institutions. How can these organisations possibly take people through the competency model for each new task? Impossible.

Moreover, we have firms that exist which are full of advisers who have worked for numerous institutions which have gone bust for bad business practise, and passed the bill onto the FSCS levy – a charming term for the good financial adviser. The FSCS levy should be loaded on those that carry the risk.

Their limited liability should not exclude them from their previous appalling advice. If the adviser is now working in the industry again in another phoenix organisation he should be held responsible for the advice. Instead they carry on and another sweep-up commences after the customer has been stiffed again.

In summary, we should see responsibility taken by all parties with the appropriate forward planning by the regulator, ensuring that those who are giving advice are competent, because for many of the above they still sit behind their wheels saying ‘vroom vroom’.

Peter McGahan is managing director of Worldwide Financial Planning.

The views expressed are those of the author and not those of the company he represents.

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