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IFAs must break the pattern of top-down financial hierarchy

We have witnessed the failure of governments, central banks and regulators across the world to detect or prevent a period of financial excess. History records many such events and all bear the same hallmark, failure at the top paid for at the bottom.

Need we suffer from this pattern? Adair Turner’s analysis of the causes of and cures for the troubles sounds hugely complicated. But is it?

As an IFA, think of the FSCS. Your survival requires you to account for your own liabilities but also pay for the failures (undetected by the regulators) of everyone else. Similarly, the public must cough up for its own liabilities and for the failures (again undetected) of the banks.

Would you, as an IFA, wish to be able to participate with your clients and the public in showing why it is possible to break these patterns?

When you hear discussions that banks are too big to fail, are you and the public just there to be used as an ATM when things go wrong? This need not be the outcome but first we must demonstrate that bottom-up alternatives can be developed.

The first issue to look at is bank charges. The Office of Fair Trading sought to challenge the banks over whether their charges were fair and the FSA allowed a waiver while the matter went to court. It affected millions of people and involved millions of pounds. The OFT lost the case and the apparent end to the matter was accepted by the regulators and by the past and present Government.

But what if there is evidence to show that the OFT, FSA, the Treasury select committee and Government, in looking at a big, top-down picture got it incredibly wrong?

IFAs can point to a different way of understanding and vastly improve matters for themselves and the public. In terms of global finance, IFAs are small but maybe that is the very quality that is needed. Macroeconomics at the top is but the aggregate of the micro. Therefore, do not judge yourself on size but on your ability to be an independent catalyst for change.

There is widespread discontent among the public about the past activities of the banks and the costs that will affect generations to come.

Do you ever ask your clients what they need from a bank? Do you ask them, as the FSA would wish, whether they are being treated fairly? Is now the time to start doing so?

I will shortly begin an open blog that will start by addressing this question of fairness over bank charges and provide the evidence of why I believe politicians and regulators failed the public.

It will continue into more substantive issues such as the FSCS and beyond.

IFAs must demonstrate a different way of doing things, not in theory but in practice, with the public, bottom-up, not top-down.

Mike Fenwick is an industry consultant and his blog will be running at


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There is one comment at the moment, we would love to hear your opinion too.

  1. Mike, this is half the size of the version you sent me, I wonder if some of the less interesting commentators and regulars could use less space so that you can get all your excellent thoughts into print…

    Dream on?

    Anyway, will the regulated or the regulators be able to grasp what you say because they see it as being complicated when it is quite simple in reality?

    Again, dream on?

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