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Confidence builder

You may recall, that Sir Callum McCarthy’s Gleneagles’ speech used historical references to make a point about how incentives drive behaviour and how the wrong incentives can have results that are contrary to the public interest.

If he were speaking today, he might be tempted to use a very contemporary example – that of cash bonuses to bankers for decisions that drove short-term profits at the expense of the longer-term consequences.

What he was highlighting was how, without a proper appreciation of the bigger picture, whole industries can develop processes and behaviours that are, ultimately, in no one’s best interest – that we can get so caught up in the detail of what we believe is required that we lose sight of the objectives.

The recent hullabaloo surrounding qualifications is one such distraction from the real outcomes that the industry together with the regulator should be working towards.

There is a danger of distractions harming the credibility and professionalism of our industry to work together to achieve the step- changes that have to happen if we are to regain the trust of consumers.

Consumers are, after all, at the heart of the FSA’s objectives for the industry and they should be the focus for providers, practitioners and their professional bodies.

Let us remind ourselves of the FSA’s desired outcomes:

  • An industry that provides more clarity for consumers on its products and services

  • A market that addresses consumer needs.

  • Professional standards that inspire consumer confidence and trust.

  • Competitive forces to work in favour of consumers.

  • Viable firms that are able to treat their customers fairly.

  • A regulatory framework that does not inhibit innovation that benefits consumers.

    The key words are confidence and trust.

    Advisers must inspire both if we are to convince consumers that we have a valuable role in helping them protect and enhance their wealth.

    At the PFS, we believe that the new benchmark qualification should deliver a notable step-change that is evident to consumers.

    Research has already shown that the majority of people believe or expect financial advisers to be qualified at degree- level – level 6.

    Will it be enough for existing advisers to top up a level 3 qualification with a level 4 exam?

    Does this create an appropriate qualification for new entrants or should there be a brand new level 4 qualification?

    What are the views of the consumer lobbyists and the FSA, whose long- term objective is to raise the bar higher?

    The answers to these questions have yet to be answered and the sooner they are answered the better.

    When given the choice, it is human nature for people to opt for a shorter road but if they do, they need to know whether it will lead them to the right place.

    Fay Goddard is chief executive at the PFS

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