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Fighting for a common cause

The view that industry bodies are ineffective in “fighting” the regulator is sometimes expressed in the industry.

I would suggest that this argument is based on an invalid assumption, which goes something like: “We are perfectly all right if left to our own devices and the Government and regulator have no right to interfere in anything which is important to us. So we need to say no with a loud voice.”

However, many members of the PFS perceive their relationship with regulation in a different way. Feedback from members suggests that their priorities are more to do with business development and reducing attacks on their reputation rather than political infighting.

Those who wish to call themselves professional require a professional body to promote commonly agreed standards. These standards must not only promote client interests but also the integrity of the framework within which those interests exist. A profession is brought into good repute not just by serving clients well but also bringing to that process standards of morality, skill, care and efficiency.

Once commonly accepted standards are agreed, they need to be enforced. Without regulatory powers, a professional body cannot ensure that there is consistency of purpose and action.

Professional bodies in the past were often created by like-minded professional people who then acquired regulatory functions through seeking legislative empowerment or a Royal Charter.

In the case of financial services, we got the regulation first and it is now our task to fully establish the professional body.

Why did we get the regulator first? The process was quite simple.

First, undeniable problems in financial services led to media and public comment. The more practitioners in this field were thrust into the limelight by the need for them to substitute for functions formerly attached to the welfare state, the more comment centred on their failings, because they affected many people.

Governments then had the opportunity to undertake a crusade to put matters right. They may have figured that such a crusade would win them votes. They were then seen in the media as publicly beating up the industry. Consumer bodies egged them on from the sidelines. The outcome was regulation.

I would suggest to you that we need to change this model fundamentally.

We have a responsibility to continue to work to change aspects of regulation which are bureaucratic or unhelpful to the maintenance of professional standards or sectoral viability. We must work together with the regulator to improve the reputation and standing of the industry.

If we are successful in this, a new vista opens up of a respected profession, which reassures the public. If the work fulfilment of the profession is enhanced, many more will chose it as a career.

So our aim is a much greater degree of unity, seeing professional bodies, policymakers and regulators as allied in restoring public confidence in financial services.

We may well criticise the FSA but ultimately we are all on the same side.

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