BDO head of financial services Tim Kirk started his working life marketing consumer goods but he says financial services looked like a more interesting challenge.
After graduation, he joined Unilever but says the world of consumer goods was not as exciting as he had hoped, so he moved to financial services to experience an industry that called for more complex solutions.
After a short stint with Standard Life, Kirk joined consultancy firm Price-waterhouseCoopers and has also worked for KPMG and Ernst and Young.
In 2005, he decided to set up the Kirk Consultancy as “it was the opportunity to focus on serving clients and giving them the very personal advice I wanted to give”.
The business specialised in marketing and advising companies on consumer experience and in the five years he ran the business he worked for a range of different businesses in banking and insurance, including working with the FSA to help develop and embed treating customers fairly.
Given many people’s gripes about the impact of TCF, he jokes this may be “for better or worse” but defends the idea of TCF as helping to rebalance the whole of financial services in favour of the end-consumer.
“Within TCF, there is a lot of really good stuff. It has helped move the industry forward but there is still room for improvement. Senior management’s commitment to the customer agenda is broadly stronger across the industry than it was back in the 2000s.”
Although he says “wild horses weren’t going to drag me back to another large firm”, the opportunity to lead the financial services team at BDO was too good to pass up. “There is a need in the marketplace for some real, credible, strong challengers to the big four.”
The opportunities for consultancy firms in the present regulatory environment are easy to see, with the RDR, Solvency II, banking reform and the financial transaction tax all having the potential to radically change the way that financial services operates in the UK and in Europe.
The RDR is the most pressing issue but Kirk says he does not expect to see the large scale of IFAs leaving the business that some have predicted. “I don’t think there are going to be hordes of IFAs leaving the industry. The advisers are getting the qualifications, so I don’t think we are going to have an IFA drought.”
But he does warn that IFAs should not be delaying their efforts to review and reform their businesses so they can function after the RDR.
“For some firms, the debate has been ’if only I had more information from the regulator’, or ’if only I can get the training in place,’ rather than addressing the issues of their business model of how they make money and make profit.”
He believes the decision by some banks, including HSBC and Barclays, to stop offering mass-market advice is a concern. “For the less affluent elements of the population, that is where they are most likely to have gone in the past, so as that route is closed, it potentially opens up an advice gap.”
He says this is also an example of the wider issue of the unintended consequences of financial regulation. “One of my big concerns following the credit crunch is there was a need to review regulation but I think regulation still does not confront the unintended consequences of what they are trying to do.
“The RDR aims to improve professionalism and remove commission bias, you can’t argue with that aim, but the unintended consequence may be to increase the advice gap.”
He says forcing banks to increase the levels of capital they have to hold is another example. It inevitably makes borrowing harder and more expensive, pushing up business costs.
“Regulators need to think through and ask, if we do this, these are the things that will happen? Are we happy with that? Is that a risk we are prepared to take or is there something else we can do?”
The change to twin peaks’ regulation is too early to call, says Kirk, and he considers that splitting the FSA into the FCA and PRA makes it easier for each to concentrate on a primary goal, although he warns of the danger of a lack of communication between the two new regulators.
“Having one entity to focus on one thing and one to focus on conduct and consumer risk can be sensible. Having one objective makes it easier to achieve that objective. But there is a risk of a lack of co-ordination between the two.”
This is particularly an issue at a European level, an area he thinks financial services has been particularly bad at in the past and that is only going to get more important.
“So much of our regulation now comes from Europe and previously the FSA has been our voice in Europe, we now will not have a single voice at each of the individual European regulatory bodies. Sometimes one will be representing on behalf of the other and that leads to the risk that we do not influence early enough or well enough regulation coming from Europe.
“I do not think the UK has done a good job of keeping an eye on regulatory development in Europe. Our industry tends to pick it up quite late in the process, at which stage it is too late to have significant influence on it.”
Back in the UK, Kirk suggests it is not just advisers that are in danger of getting caught out by RDR changes. He says some providers have catching up to do so they do not get left behind.
“If they don’t become RDR-friendly in the products they sell and how they interact with advisers, then they are going to be left behind. Already, we hearing from advisers that some providers are in a better place at this stage and are seen as more RDR-ready or RDR-friendly.
“Some have been focused on the internal effect of RDR on their systems, without thinking what impact is this going to have on the market externally, on consumer behaviour, on adviser behaviour and adviser preferences.”
This raises the issue that the RDR could see IFAs’ choice of provider influenced by business factors other than the best product at the best price but Kirk says a much more serious issue is a lack of engagement from consumers.
“If one of our concerns has been that consumers do not engage properly and that leads to poor decision-making, it may be that the RDR does not change that.
“It will be required for distributors and providers to make clear what the charge is and who is paying what to whom but if the consumer does not want to read it and engage in it, they will not necessarily be any better informed and make any better decisions.”
Born: Northern Ireland, 1965
Lives: London and Edinburgh
Education: University of Edinburgh, MBA
Career: 2010- present: partner and head of financial services, BDO; 2005-10: founder and managing director, The Kirk Consultancy; 2002-05: director, Ernst & Young; 2000-02: head of strategy consulting for investment banking & asset management, KPMG; 1996 – 2000: principal consultant, Strategic Change and Market & Customer Management, PricewaterhouseCoopers Consulting: 1993-96: project manager, corporate development, Standard Life
Likes: International Medical Corps, travelling to exotic locations, sports, theatre, Arsenal
Dislikes: Unfairness and injustice, illogical thinking
Drives: Jaguar XK
Book: Anything by Jo Nesbo or Simon Kernick
Film: No favourite, it is like having a favourite child
Album: No favourite, my taste in music is famously bad
Career ambition: Get out when you are still on the way up!
Lifetime ambition: I’m committed to what we are doing at the International Medical Corps. If we can keep delivering great work and keep making it a bigger and better charity doing great work in really bad places
If I wasn’t doing this I would be…It would be great to be an author, which I could then combine with travel to do my research