Hornbuckle Mitchell’s non-executive director and adviser to the International Compliance Association wants to give finance and regulation an ethical makeover as he believes only then will the industry gain credibility
Interview by Rachael Adams
Once asked what you pay a regulator for, Hornbuckle Mitchell new non-executive director, adviser to the International Compliance Association and chair of British Standards Institution committee on sustainable development David Jackman replied: “Good judgement.”
It is no surprise that Jackman is seen as something of an authority on financial regulation. He was head of training and competence at Imro and was part of the original management team at the FSA as the first head of training and competence.
“Compliance is an underrated function. It has a reputation for being a costly irritation but I remain a fan of the FSA.”
And well he might - Jackman had a role in shaping its compliance guidelines. “When I got the role in T&C there, regulation was still very tick-box.
“Although I am in favour of enforcement, I thought we could find better ways of encouraging firms to do a good job and saw T&C as a tool in achieving that. We were the first to focus on outcomes rather than processes. It was a first step towards making the FSA more industry-led.”
However, Jackman would be the first to admit that the relationship between the regulator and the industry is far from perfect.
“There is still an unhealthy standoff. Not enough effort is put into building under-standing on both sides of the fence and I would like to see the Financial Services Skills Council do more on that front.”
Jackman, who was the first chief executive of the FSSC, says the organisation has a way to go before it succeeds in improving the relationship between the industry and the regulator.
“I wanted the FSSC to be more aggressive in raising standards across the board and take on some of the FSA’s functions. It is getting there now but it has been a rocky road.”
Jackman believes the FSA’s relationship with the industry has been equally volatile. “The regulator is under a lot of pressure to be more rigorous. Firms that are fundamentally flawed are the ones that need to be deauthorised. But with firms that can demonstrate they are trying to put the right systems in place, being too tough can backfire. The FSA has to be a good judge of character.”
But the regulator has not always succeeded in doing this - especially with smaller firms, says Jackman. “IFAs have been given a lot of attention by the FSA because they are the visible end. They are the front line so have felt a lot of heat.”
Jackman has been party to this heat with his recent appointment at Sipp provider Hornbuckle Mitchell. “I wanted to see regulation from the other side. I have learned a tremendous amount and can see how regulation affects a firm.
“There needs to be a raising of standards and I am in favour of measures such as the retail distribution review but I do not think regulation has understood IFAs well enough. The regulator needs to be more flexible in dealing with them. There are a lot of very resourceful people out there who need help more than they need retribution.”
On the issue of the RDR, Jackman is unequivocal. “The view that it is a burden that has been chucked on IFAs is not very mature. Raising exam standards is long overdue and I would have liked to have done it during my time at the FSA. I see the RDR as our final chance to win back public confidence. This is the last-chance saloon.”
Although Jackman believes exams need to be more taxing, he says qualifications are not everything. “You cannot just see professionalism as ticking an exam box,” he says. “Ethics are more important than competence, so the RDR should measure cultural indicators of how much firms value their clients as well as their qualifications.”
This desire to see regulation take ethics into consideration is why Jackman led the BSI’s work on ISO 22222 until last year. The standard bears a striking resemblance to the RDR and combines ethics, higher qualifications and recognising quality experience in financial planning. After being marketed to individual IFAs previously, it is due to be rolled out across companies this year.
“It has all the factors that are now in the RDR but it is way ahead of the FSA. The BSI kitemark is the fourth most recognised brand in the UK. The public will not recognise the RDR initials but they do know that the kitemark and the term chartered are marks of quality. It is the dream ticket.”
But there is more to a healthy industry than kitemarks and standards. “It is about social responsibility and community engagement,” values still seen as at odds with finance, according to Jackman.
“The industry is seen to be totally self-obsessed. Some of the fundamental errors that caused the recession stemmed from this selfishness and it is a reality that needs to be fought.”
Jackman developed the Ethics Mark, awarded to businesses by the Ethics Foundation, to help embed ethical principles and decision-making frameworks in businesses to help them make ethical choices.
He also says sustainable development can offset this perception. “If companies make more responsible decisions in their advising and lending, the industry will gain credibility.”
Although sustainability is more prevalent in other industries, Jackman believes it is only a matter of time before it hits the financial mainstream. “Once people realise you can make a good return and be ethical, it becomes part of company strategy and plays a proactive role in business.”
Encouraging businesses to take sustainability into account is the role of another of Jackman’s projects, the newly-launched Green24 online portal.
“Unlike exams and regulation, you cannot force ethics on a company,” says Jackman. “Green24 shows individuals and businesses how to add an edge of sustainability to their day-to– day workings and explain how it can benefit them in the long term. Later this year, we are going to add ethical financial services products.”
Aside from giving finance an ethical makeover, Jackman has also been working as an adviser on sustainability for the Olympics. “There are a lot of pressures but, as a Spurs supporter, I am particularly interested in how the land is used afterwards,” he says. “We are just going to try to do something inventive and push boundaries.”
Born: 1960 in Hertfordshire
Lives: Grasmere, Lake District
Education: Oxford and Cambridge Universities
Career: 2011-present: non-executive director, Hornbuckle Mitchell; 2006-present: director, The Ethical Space, The Ethics Foundation; director, Resources Compliance; adviser to the International Compliance Association; adviser to Green24; adviser to the Commission for Sustainable London 2012; chair of British Standards Institution committee on sustainable development; 2004-06: visiting professor and director of the London Financial Academy; 2003-04: CEO for development phase of the Financial Services Skills Council; 1998-2003: head of training and competence, FSA; 1994-98: head of training and competence, Imro; 1992-94 head of education, the Securities Institute; 1990-92: stock exchange
SFA examinations officer, London Stock Exchange
Likes: Fell walking, the Green24 website and Tottenham Hotspur
Dislikes: Unnecessary bureaucracy, multiple-choice exams and a box-ticking approach to ethics
Drives: A Landrover
Book: A Passage to India by EM Forster
Film: Never Let Me Go
Album: Under the Iron Sea by Keane
Career ambition: To help firms see the real value of ethics and sustainability as the core of their business
Life ambition: To be seen as a pioneer, ahead of the curve in areas that matter
If I wasn’t doing this I would be…An architect