For the casual observer reading the financial press, you would think our profession is full of schemers, scammers and crooks.
We have got Port Talbot sounding like a disaster relief zone, fraudulent storage pod operators calling investors from the Costa del Crime and even a large bank causing “material financial distress” to some of its small business customers.
If you manage to avoid losing your pension benefits to this latest round of scammers, then there is always the cryptocurrency entrepreneurs ready to part you from your hard-earned cash. Those touting such trading strategies might not be regulated advisers but it does not really matter to the typical consumer, who sees “financial” in the story and assumes it is all the same thing.
There is a perception versus reality issue at stake here. As professional, ethical advisers, we know the vast majority of clients are getting a good, safe experience. They are not being flogged the sort of high risk, esoteric, overseas junk investments that inevitably result in a loss.
No, the majority are having their financial goals satisfied via carefully-considered plans and the use of regulated, dare I say boring, investment strategies. This is how it should be.
But we do need to contend with the collective damage to the reputation of our profession caused by the actions of a relative few. The press will always report bad news, especially when it revolves around losses due to unsuitable recommendations made by a trusted adviser.
Even with the best regulation in the world (which we are a long way from having here in the UK), we cannot expect these stories to disappear. That said, there are some simple steps we can take to make things better.
The phoenix has to stop rising again
Firstly, this “phoenixing” nonsense has to stop. Where an individual is a director of a regulated firm which goes into liquidation and leaves liabilities behind for us to pay for via Financial Services Compensation Scheme levies, the FCA needs to thoroughly investigate them before they are allowed to work in financial services again.
The same goes for individual advisers at a failed firm. But rather than an inquiry, it is the professional bodies that should be checking their position before granting a new Statement of Professional Standing.
Secondly, we need to explore the inherent biases caused by the way we charge for what we do. One of the wonderful things about retail financial services is its diversity of business models and charging structures, which encourages innovation and price competition.
But the Work and Pensions Select Committee was right to raise the issue of contingent charging, especially for higher risk advice areas like defined benefit transfers. Its use should be allowed to continue on the proviso that advice is peer reviewed by a randomly selected adviser.
Better advice needed on the ground
Finally, it is time we see the levies for services used to deliver something genuinely helpful for those unable to access advice. This does not mean building more websites, but individuals on the ground sufficiently equipped to deliver advice.
The Money Advice Service had a budget of £15.9m for money advice and £42.2m for debt advice in 2017/18 but it took a group of volunteers to spend days in Port Talbot offering guidance to members of the British Steel Pension Scheme.
These are not big things to make happen. Without change, all we can expect to see in the future is what has happened so often in the past.
Martin Bamford is managing director of Informed Choice