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FCA: Advisers should be reporting bad practice

                                                  Debbie Gupta

Poor conduct in the advice profession reflects negatively on both advisers and the regulator as it increases the level of mistrust between the two, says FCA co-director of life insurance and financial advice supervision, Debbie Gupta.

Speaking at Money Marketing Interactive today, Gupta says the watchdog’s view of the industry is not as positive as it could be.

She says: “My comments on the state of things are not as sunny and optimistic as they might be in the future and I do not want mistrust to be how the FCA frames our relationship with advisers.

“We need a common understanding on both sides that we are in fact on the same side and we all need to get to a place where we know what good practice in the industry looks like, and how we put the public at the centre of that.”

A major concern for the FCA is advisers’ failures to call out bad practice, Gupta adds.

“Poor practice damages us all, not just the individual who does it. The culture of calling out bad practice and of whistleblowing is not yet commonplace and advisers don’t come to us when they see it is happening.”

Gupta says the British Steel Pension Scheme is a particular example where some advisers could have been more direct in their communication with the regulator on poor practice they had knowledge of.

But the constant attention on poor practice does increase the difficulty of advisers’ work.

Gupta says: “Everyday we hear stories regarding advisers and the FCA about things that have gone wrong. That level of reputational damage hurts the regulator and washes out the good work we and advisers do.

“We need to increase our focus on professionalism which means so much more than just qualifications. Professionalism is knowing what to do when there are no rules in a certain situation and no textbook method of response.

“We want this industry to be professional with strong codes of conduct alongside a principle of ‘do no harm’ and deeply ingrained ethics.”



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There are 20 comments at the moment, we would love to hear your opinion too.

  1. Well, when one is at the very top of the food chain, its easy to make comments like this irrespective if its heartfelt or propaganda.

    We hear a lot from the FCA on fairness, and in most cases its one way traffic…. the PI debacle is one fine example, then there is the understanding and this one primarily comes down to costs, the costs, of ill thought out directives, rules and compensations…. all of which are past on to the industries clients, yes paid immediately by firms but clawed back from its clients in increased costs and charges. Do we ever see or hear the FCA addressing this ?

    No, we get statements saying we (the FCA) expect firms to soak up these costs and not pass them on to its clients (we will be watching this very closely) so in fact a threat !

    I do however agree, the good advisers and the FCA do have a common goal….. good practice and the clients being central to what we “BOTH” do and how treat them.

    Final thought “bad practice” Debbie implies this is an advice issue and a one way street, which is a bit arrogant when, ignoring the fact, hey, some or a lot of this bad practice is our fault ? But then when people cannot view themselves honestly in the mirror, trust is the unicorn !

  2. That’s a joke, isn’t it?
    We have an incompetent bunch of ex bankers that haven’t a clue about the job they are doing and she says the FCA don’t have trust in us. As I understand it, the FSA/FCA have ignored warnings from IFAs about such matters as the recent scandal involving London Capital ISAs and when it comes to the British Steel pension debacle the initial problem was caused by the totally unreasonable timescale imposed by the Pension Fund. The FCA and other Govn’t bodies were so keen to resolve the ownership issue and avoid a shutdown that they allowed the tight deadlines.
    If this post is an accurate reflection of Gupta’s attitude to IFAs she should be sacked forthwith. Minfd you, it’s the same mindset as the rest of the clowns have.

  3. For many firms, the relationship between the FCA and themselves has been irretrievably broken as a result of the increased FOS limits and the problems with PII. Rushed through, how can we ever trust a CP again? It does not help though when the FCA keep blooming focussing on inputs and hoping that the outputs take care of themselves – a concept not accepted by anyone else. The FCA must ensure a form of self regulating quality standard which monitors the outputs to ensure consumers are looked after. It also allows the consumer to check that a firm meets quality standards. What have we now? As Justin Cash says a mish mash of FCA Register (with its unfriendly language), Companies House data (out of date and irrelevant) and Trustnet and Google reviews! The FCA as a regulator needs to drive this and it would get the support of responsible and concerned firms that share the same ideals.

  4. I called out an adviser who had blatantly breached every rule in the book and also ignored the compensation he was ordered to pay by FOS. He closed his business,is now registered with another Practice and still giving advice. The FCA are complicit in poor practice so please don’t point the finger in our direction as there are three pointing back at you Debbie.

  5. Might I make the suggestion that the regulator also needs to call itself out on it’s own poor practice, when this occurs and also the poor practice within the FOS, when this occurs.

    Currently advisers are held to one set of standards, which are generally poorly communicated, whilst the FCA and FOS are held to a totally different set of standards, with little, if any consistency between the two.

    This is especially noticeable in some of the FOS decisions that come out, where clients have clearly had all or nearly all the relevant information, have made an informed choice and then with hindsight that choice has turned out to be wrong.

    Yet how often do we hear that the FOS has decided in favour of a client, despite the problem occuring because of the clients choice and frequently despite the adviser or provider having little if anything to do with that choice or it’s consequences.

    This then creates an environment, where advisers and providers feel unfairly treated, where clients hardly ever face the consequences of their own silly decisions. And where advisers and providers are expected to have a crystal ball and knowledge of the future because the FOS always apply rules that are either “current” or even totally new, rather than considering the what the rules/guidance was at the time the “advice” or transaction occurred.

    When you then consider that advisers and providers have little, if any recourse, should a bad decision be made by the FCA or FOS. Whilst the FCA and FOS appear to be pathologically unable to admit when they get it wrong and you have the recipe for where we are currently.

    Yes we are both on the same side (at least theoretically), we both want good client outcomes, but where advisers and providers understand that sometimes despite our best intentions, things will go wrong, through no fault of ours. The FCA and FOS do not appear to understand this simple concept and hardly ever do they feel that the client should ever shoulder responsibility for a poor decision that they have made.

    However I suspect that this is a result of the political state this country has entered into, where vast swathes of us believe that someone other than ourselves is responsible for our actions and that someone must always be to “blame”, when things go wrong.

  6. “The culture of calling out bad practice and of whistleblowing is not yet commonplace and advisers don’t come to us when they see it is happening.”

    Wow! As a repeat whistleblower, I promise you that the problem with whistleblowing is that it is completely mistreated by the FCA!
    London Capital last week, LPH this week – both were signalled to the FCA by whistleblowers many years before the problems became public.

  7. Peter Blackburn 4th April 2019 at 2:40 pm

    I agree with the sentiment expressed here by Debbie, but what will be the medium of communication between advisers and the FCA? Any contact I’ve had with regulators at PFS roadshows and other events has been met with thinly-veiled contempt directed at advisers. Communication with the FCA, if you could call it that, is one way in my experience. How do we feed back to the FCA with confidence?

  8. Having whistle-blown at Port Talbot with Al Rush, I was asked to answer questions at the work and pensions select committee. Following me was the FCA who got a hard time for not knowing what was going on.

    I don’t think it pays to play the blame game, after that meeting, Al and I and others did our best to help the FCA in their difficult time .

    I also worked with Debbie when she was at NEST. She will remember some of the conversations.

    Working in a small advisory firm is tough, it is not the same as working for a Government agency.

    Small firms that helped the FCA should be praised, just as should the many small businesses that have made NEST a success.

  9. Julian Stevens 4th April 2019 at 4:48 pm

    It might help were the FCA to put its own house in order and actually do something about the numerous reports it receives from practitioners about malpractice.

    How many times have we read on this and other forums reports from advisers who did their civic duty by informing the FCA of downright criminal activities in certain quarters, only for the FCA to do absolutely nothing? There’s a widespread feeling that Why should we bother?

  10. It seems to me that the FCA like its predecessors lives in a bubble where no matter how many times they get it wrong nobody is ever held to account. I have lost track of the number of regulators I have had in the last 40 years but so far each one has been shut for not being fit for purpose. Once you are working in the bubble your job is safe no matter how incompetent you prove to be.
    We are dealing with a case where a person was switched from his DB scheme in 2012 into a SIPP. His original 112,000 is nor worth £54.90. THe firm involved is still in business and regulated by the FCA in spite of many complaints to the Ombudsman which have been upheld. The Ombudsman say that they have reported this to the FCA who have done nothing. The firm are still sending out mailshots looking for the same type of business.

  11. Peter Cranwell 4th April 2019 at 6:16 pm

    I really had difficulty taking this seriously: as other commentators have mentioned, the practise of advisers previously found to be flouting the rules/regulations/guideline/law
    simply closing a business down and then re-emerging under a different name is a professional shame – and that blame lies squarely at the feet of the regulator.
    And moving on to “trust”: I have just been told that, due to increase in FOS limits (how many people, I would love to know do they envisage THAT will actually benefit?), I am no longer insured. As a DB specialist, I am virtually out of work and have to disappoint the clients who have come to me for advice: they suffer, and I lose my livelihood?
    The FCA should be promoting professionalism: this is true. I suggest that they begin by putting their own house in order.

  12. This is a vext question. On the one hand I understand the rationale, but as others have said when you do report something there is little or no action – so why bother?

    On the other hand for any organisation to encourage reporting on your neighbour does rather smack of totalitarianism. The Stazi in East Germany encouraged this as did the Nazi and the Communists. It has rather a bad taste for UK palates.

    • A very, very poor analogy Harry. You shouldn’t even have to think twice about reporting wrongdoing – there’s enough bad practice already. I’m sure you know that and you’re just being provocative.

      • I see where you are coming from Martin and as I said I have blown the whistle before now. But I do think my analogy has legs. How long before someone whistle blows to inconvenience a competitor?

        Anyway – Happy New Year to all – work till May for the Government and then the rest is yours.

        PS. To Editor. Your site still doesn’t work properly on Google Chrome.

        • Julian Stevens 8th April 2019 at 9:40 am

          Whilst it’s possible that one firm might whistle blow on another primarily to cause inconvenience, I have to say that, for a number of reasons, I don’t think it’s likely.

          Firstly, IFA’s generally aren’t given to perpetrating such malicious mischief against each other and secondly the regulator would probably take a pretty dim view towards any firm that did so without verifiable justification, not least because it would constitute wasting their time. Precious few firms would be inclined to risk that sort of attention just for the sake of trying to cause bother for a rival.

  13. I have whistle blown too and I used to reply to FSA & FCA CP’s I thought I’d replied to the FOS limit increase CP, but my name doesn’t appear. Perhaps because it was too critical and I might have used the name “MUPPETTS” in it.
    They dpn’t have a Scobie often because they have onlt worked for big employers and see success at work as climbing a ladder whereas many advisers see success as helping the clients and continuing what e do DESPITE what the FCA through at us and the criticism of everything we do.
    Keep saying “bad dog” and funnily enough we bite back.

  14. The whistleblower on the Connaught Fund was hung out to dry by the FCA who then sat on the information for two years, allowing advisers to continue recommending the product when they themselves knew it was dodgy. With IFAs subsequently being found guilty of giving bad advice and being put out of business, the whistleblower being exposed by the FCA and being rendered unemployable, and an APPG working in conjunction with Libertatem eventually forcing Capita to restore investors to their original position, our feeling is that somebody at the FCA and the FOS should be held accountable. Until they put their own house in order, there will never be much confidence in the system they have created.

  15. […] The issue of whistleblowing was a theme of a Money Marketing conference I was involved in during the week. Debbie Gupta used her platform as FCA keynote speaker to call on IFAs to raise the standards of their profession by whistleblowing to the FCA on bad practice (report here) […]

  16. Julian Stevens 6th April 2019 at 1:23 pm

    What about the reputational damage that the FCA regularly brings upon itself as a result of its failures to avert one motorway pile-up after another?

    The results of a poll to ascertain public confidence in the FCA might well be enlightening. Do you believe that the FCA

    1. secures an appropriate degree of protection for consumers?

    2. protects and enhances the integrity of the UK financial system?

    3. promotes effective competition in the interests of consumers?

    Start by asking those who’ve lost their pension funds as a result of having been advised (by a regulated adviser firm) to invest them in something like Harlequin or Connaught, to name but two.

  17. Andrew Cartlidge 8th April 2019 at 1:54 pm

    I have on two or three occasions alerted the FCA to serious instances of bad practice that I came across in third party firms during my career. On not one of those occasions did I consider my call to the FCA worthwhile. On all three, I spoke to somebody self-evidently at the most junior level – who had no understanding of either the issues I was reporting, nor of their seriousness. I had no confidence whatsoever that the issues I raised would be investigated – yet was repeatedly assured that the FCA ‘cannot ever’ inform ‘whistle-blowers’ of any action or investigation undertaken. The FCA needs to consider how it treats ‘whistle-blowers’ and what it actually does with the information they provide, before criticising their apparently modest number. As others have said, there have been numerous cases of the FCA being alerted to widespread abuses of utmost seriousness, yet declining to take action.

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