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Robert Reid: FAMR has been hijacked by personal agendas

When my late parents retired, one of their favourite TV shows was Countdown. I was reminded of it following the report from the Financial Advice Market Review’s working group, released earlier this month.

The conundrum as to the best way to ensure people recognise regulated advice may as well have been determined using a special edition of the programme.

Any lateral thinking was clearly put to one side. That is one of the worst characteristics of our sector; the objective is always frustrated by everyone protecting their own position. So we are now no further forward, which brings into question those involved, the discussions and whether they were up to the task.

I say this after reading that chair of the working group Nick Prettejohn is urging the FCA, the Money Advice Service and the Treasury to “carry forward the panel’s work for it to be a successful reality”. The statement avoids the fact his working party were stymied from the outset, partly by having a wish to preserve instead of evolve.

There are various instances in my career that I have seen personal agendas cause nothing but anguish and prevent progress where it is most needed.

One such example was when I helped set up the Citizens Advice Bureau project with the Society of Financial Advisers, which saw interference from various quarters who sought to derail it. Ironically, when it succeeded, they then tried to hijack it without even attempting to understand why it was such a success.

In December 2015, I attended a FAMR/Treasury discussion where most of those there took their own perspective and not that of the public. It was clear those involved were focused on what they thought advice and guidance was, not even trying to see it from a client’s position.

Most irritating was ex-chancellor George Osborne’s glib use of the term “advice” when launching the MAS. Now, I know fellow Money Marketing columnist Paul Lewis will say I am being precious but far from it.

I fully accept no one owns the term but if it is being used without context, then definition is as crucial as it is for the word guidance.

The public needs to know who they can pursue if the advice or guidance is not suitable. There is a potential they could find out too late to recover from its effects.

We also found out recently that the FCA has ruled out standardised factfinds, which demonstrates it has completely missed the point. If we can rely on non-subjective data collected from another firm, then we can reduce costs.

After all, as Defaqto insight consultant Gill Cardy points out, we do this for anti-money laundering, so why not core data? As usual, the regulator has misread the objective and another attempt to make advice more accessible is thwarted.

Given we are told the regulatory sandbox is where all the “groundbreaking” action will be, those playing may find their business models slipping through their fingers unless some new thinking starts to emerge.

Robert Reid is director at The Ideas Lab

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Unfortunately Robert, you are correct. The reason? Much like politics in general, it’s all about vested interest. From the FCA’s perspective, and the justification of their own existence, they cannot actually solve anything, if they did, sooner or later they would put a lot of their colleagues out of a job and the gravy train would come to a grinding halt.

    Very much like the government could solve a lot of the countries problems if it really wanted to, but instead they play at showing a pretence of trying to solve the problems, in order to carry on justifying it’s own existence.

    • I am with you on that one for sure. If the FCA had followed through with the recording requirements, large numbers of FOS staff would have had to go as there would have been actually EVIDENCE of what was said and not said rather than file notes which the FOS can choose to ignore or not as they see fit. All they’d have to do is listen to the recording and then make a decision based on the FACTS, not the flawed recollections spurred on by todays complaint culture.

      Fact Finds record FACTS, like date of birth, assets held etc and it is ONLY that which could have and should have been portable. Soft facts and opinions, plans and priorities are subjective and do need an adviser involved, but a lot of money, time and effort could have saved if the F-pack had accepted the argument for a common CORE fact find with additional specific information asked collated and RECORDED immediately before provision of advice.

      Advice is a two way process otherwise it is just dictating to a client our preconceptions and prejudices rather than advising to the CLIENTS prioritization rather than our own.

      I also agree with Robert Reid.

  2. I’m sure you are right Robert. But what I really fail to comprehend is the basic illogicality. We have reviews, new edicts and new rules all adding to the burden of regulation. This obviously costs firms money. In addition we have the ever increasing costs of the FCA and FSCS levies, not to mention PII costs, Professional Body costs and all the panoply of other costs associated with regulated advice. Obviously all this extra cost has to be recovered if firms are to remain solvent, not only for their own benefit, but also to satisfy the regulatory requirements. Again it is obvious where this extra money is to be found – in the main, from the clients. (I accept they may be efficiency savings as well). Set all this alongside of the continuing pressure from the regulator for advice firms to ever lower their charges.

    One might wonder therefore if this is just pure commercial ignorance on the part of the regulators, but as many regulators often come from an accountancy background one may perhaps deduce that they wish to bankrupt the advice business.

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