A keen orienteer, Rory Percival spends much of his working life navigating his way round adviser firms across the country, charged with spotting emerging risks.
Percival should have a good grasp of the issues facing the small firms he encounters, having worked in adviser compliance and technical support roles from 1987 to 2006, before joining the regulator. His qualifications include being a chartered financial planner.
However, he is quick to point out that he does not see himself as an “industry person” and instead naturally fits the “consumerist” role of FSA technical specialist.
“I have always considered myself consumerist. Even when inside the industry I did not feel like an industry person so a move to compliance was something that suited me. I still feel like that now, so I feel as though my beliefs are aligned to that of the FSA.”
Outside of work, Percival spends much of his leisure time outdoors. “I am a very outdoorsy person, I do a lot of hill walking and I am big into orienteering. I also have a big allotment grow my own vegetables. I am interested in anything that involves mud and exhaustion.”
Unusually, he can also tell you to the day when he hopes his FSA career will come to an end. “Six years, two months and three weeks. That is when I hit 55 and retire. After that I will probably look to do some consultancy work and maybe take up a couple of non-exec roles. But at the moment I enjoy my work enormously I feel very lucky.”
Percival took his first job in an adviser firm 25 years ago, three weeks before the stock market crash of 1987.
“My boss rang me up, he said ‘the markets are crashing’, I replied ‘the markets can go up as well as down you know? He wasn’t particularly impressed by that comment”
He later took up his role at the FSA less than a month after the announcement of the retail distribution review.
Percival says the RDR is driving significant changes for the benefit of consumers and suggests there is more bad advice being given than advisers would think.
“We get a lot of criticism for being too hard on advisers. When I was in the industry it did not seem like there was much bad advice being given. Looking at it from this side of things, it is more significant than people who work in the industry see.
“A lot of the time bad advice is related to people’s life savings and putting entire pension pots into one unsuitable fund, this has a real, material impact on consumers.”
It is this bad advice that Percival is seeking to reduce through the implementation of RDR and further supervisory work.
“I understand that it is a challenge and a big change but it is the right thing to do. I absolutely empathise with advisers and I myself am very cautious of the implications of running a business having been a director of a smaller firm.
“It is the responsibility of directors to ensure the business is successful and the security of their employees’ jobs. We had financial problems when I was director at a small firm so I am very, very cautious of the financial and practical implications that come with that.”
Percival also warns the FSA is set to take a hard-line approach to the new qualification rules with no leniency from the regulator around qualification deadlines.
“People getting their qualifications is a zero-tolerance area, if you do not have your qualifications come January 1 then you will have to send in your deauthorisation form.”
However, he says the FSA will show flexibility around advisers’ charging models, which he says they may not get right straight away from January 1.
“We will be more flexible in terms of how firms set their charges and if they need to change how that is set up, we appreciate that is something which could take a couple of attempts to get right.
“However, we will take action if there is consumer detriment as a result.”
He says his work for the FSA is enjoyable and appreciates the opportunity to influence regulation.
“One of the things about working for the FSA is that it is a good employer and it has good managers you are very empowered here. You get the scope to have a direct input into how the FSA works.
“People like myself can have direct input which is good because we are the ones on the ground talking to advisers, the guys at the coalface on a day-to-day basis.”
Percival also also keen to dispell certain myths around the RDR which have been allowed to develop, including the sugestion that advisers focused on passive investments cannot be classed as independent.
“It is very possible that advisers can remain independent. If your starting point is reviewing the whole of market across actively managed, passive, Oeics, ETFs and investment trusts etc and then end up with a shortlist you are independent.
This review could end with recommendation of just passives which is fine. However, if you start with just a list of passive options then you are not independent. We are planning to put clarification on this in the next newsletter.”
Another area which has seen much debate over recent months is adviser firms taking on permissions to operate as product manufacturers or platform providers.
Percival warns firms who undertake such models will face heavy scrutiny to ensure they are carrying out their duties as they claim to.
“If you are going into fund management or going to be a platform operator you can receive remuneration for providing that service.
“Firms cannot just do that as a smoke and mirrors tactic and really just be an intermediary firm getting someone else to carry out these functions and getting extra remuneration. That is another way of subverting the RDR rules.”
He adds the regulator will look closely to ensure the firms have the correct permissions, and expertise required.
“Permissions is core element. You have to have permissions to undertake those. You also need the expertise and capital in place. You have to become a proper fund manager or platform.”
Despite the heavily interventialist approach of the FSA, Percival says advisers must keep in mind that the most importment person to please is the client. “It is not about ensuring you appease the regulator, it is about ensuring your clients are receving a service they are happy with,” he says.
Born: 1 January, 1964
Lives: St Albans
Education: Kings College London (Latin and Ancient History) chartered financial planner
1987 – 1993: Financial adviser and technical support, General Portfolio
1993 – 1996: Financial adviser and technical support, Medical Insurance Agency
1996 – 2006: Compliance and training officer/director, Fiona Price & Partners
2006 to date: FSA technical specialist
Likes: Orienteering, gardening, hill walking
Dislikes: Littering: a symptom of so many human failings: selfishness, laziness, arrogance and a disrespect for other people, animals and the environment
Book: Lord of the Rings by J. R. R. Tolkien, Crime and Punishment by Fyodor Dostoyevsky
Film: Lord of the Rings
Album: Isles Ne’er Forgotten by Ivan Drever
Career ambition: Retire without a platform service or Cip misselling scandal
Life ambition:To walk from Lands End to John O’Groats and climb all 3,000ft mountains along the way of which there are about 300, would take about seven months
If I wasn’t doing this I would be: An archeologist