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Nick Bamford: Advisers not to blame for breakdown in trust

Nick Bamford MM 700

We don’t engender trust by talking about it. We create and maintain trust by doing “stuff”. Primarily we trust people who do what it is they say that they are going to do. Trust is a valuable commodity that can take a long time to acquire and  a very short time to lose. I think that those who seek to comment on the subject need to understand some fundamental points about why the IFA is actually a trusted adviser.

First of all suggesting that the final services industry is some kind of homogenous group of people sounds to me like some kind of “ism” (just like suggesting all men or women behave the same = sexism, or all people of a particular race behave in the same way = racism). We could probably create a new word. Let’s call it “adviserism”. Commentators like Sue Lewis of the FCA Consumer Panel fall into this trap on a regular basis.

When people claim that consumers don’t trust advisers they are demonstrating adviserism. There are more variations of advisers than you can safely shake a stick at. As other contributors to the recent thread have pointed out, to suggest that advisers are not trusted massively misses the point. Just about every IFA firm and individual that I know has a client base made up of people who absolutely trust the advice and service that they receive from their adviser.

The vast majority have also done exactly what has been asked of them by successive regulatory regimes. They have gone to heroic lengths to ensure that the advice they have delivered and the products they have recommended are absolutely suitable for their clients. They have avoided like the plague the opaque and unsuitable products and funds that represent the well reported mis-selling.

Further, they have strived valiantly to achieve the qualifications required of them and to maintain a robust and effective continuous professional development regime. They have dealt with a constant flood of regulatory rules and guidance and gone to great lengths to interpret those rules in favour of their clients.

They have successfully engineered a move away from commission-based sales to transparent adviser charging even though a large number saw such a move as less than positive. I am astonished that the so-called “advice gap” hasn’t been blamed on the adviser community yet but suspect it will be soon.

Advisers have put up with steadily increasing regulatory costs with little or no credit for the fact that they have funded the FSCS to compensate consumers disadvantaged by those advisers who didn’t buy into the points above. They have funded the MAS despite the disingenuous tagline “established by Government” and now they are going to be asked to fund the next political adventure, the ridiculous “guidance guarantee”.

All the while they have had to put up with a constant “noise” from people claiming that advisers are not trustworthy.

I wonder if the likes of Sue Lewis have any idea how insulting she is when she engages in her “adviserism” attacks.

If trust has been destroyed then the blame lies primarily with a 28 year old broken regulatory regime that has patently failed to serve the consumer well. Someone asked me the other day for some words to describe the UK financial services regulatory world, I answered with 4 words: expensive, ineffective, amateurish and mushrooming.

I absolutely support the need for a robust and cost effective regulatory regime to help protect the UK consumer. The problem is we don’t have one.  

Independent financial advisers are key to creating trust amongst the UK financial consumer we are just badly let down by a small minority who simply don’t care and people in pseudo regulatory roles spouting on when they should know better.

Nick Bamford is executive director at Informed Choice



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There are 18 comments at the moment, we would love to hear your opinion too.

  1. As ever, I agree with every word Nick says here.

    I would go further.

    The disreputable, the charlatans have all jumped on the ‘Adviser’ bandwagon. This includes the Banks, tied agents and MAS. Then they repeatedly get it wrong, and we all get tarred with the same brush.

    Here is a thought / wish. You can’t use the word ‘Adviser’ unless you really are an independent (small i in this context), qualified Advisers who actively gives regulated advice to the public for which you bear liability

    I also wish that my fellow advisers would be much more cynical before ‘distributing’ (horrible word) the latest clever idea from the manufacturing industry.

    And since wishes traditionally come in 3’s, I wish the media would be much more cynical and independent when judging the latest pronouncements from the money business, and lets see if we can’t hold them to account BEFORE it goes predictably wrong. Again.

  2. The bulk of people I deal with believe its the banks, regulator and government that people have become impossible to trust.

    All three groups struggle to demonstrate integrity, honesty and as a result are quite happy to point at anything to shift focus regardless of where the responsibility truly lies.

  3. Well, Mr Bamford – I doubt you’ll get much criticism on here for that piece. I agree with every word; what I don’t understand is what we can do about it. I sense your frustration but do not believe that the regulatory system will be fixed until it has destroyed the businesses it regulates. Then we will have a massively expensive enquiry to find out what went wrong, probably led by some dignatory such as Sir Hector Sants, who will report that no matter what the regulator did, and how often they told the public at large that advisers were crooks who were just after a quick buck, they just couldn’t make financial advisers trustworthy.

  4. Thank you Nick – so excellently put.
    But how do we get these blinkered organisations to work with us rather than against us ?

  5. Agree in full !!

    It is very strange that the architects of trust (if I can use that statement) and making sure clients can trust the advice and products they buy into, are the very same ones who seek to dismantle it at every given opportunity ?
    When was the last time if ever ? the regulator or their cohorts praised or extended the virtues of what we do ? and I mean not just IFA’s; any-one !!

    No they play the blame game; we are obstructive, not forward thinking or innovative, we are circumventing the rules, we are not entering the spirit of the rules they make, more fines, more enforcement, miss sell this, miss sell that, blah blah blah etc etc etc

    They say we get the regulation we deserve, sorry but that is so far of the mark

  6. Well said Nick and right to the point. I think it is fair to say that anybody who is surviving and thriving as an IFA has done so in spite of regulation and doing a good job rather than because of it. Trust with the public is fine for those that know us. The problem is those without contact with a good IFA or having had a bad experience (part of the advice gap) are lost and do not know who to trust. Broad based isms from the media and regulators are useless to everyone and counter productive for the public.

    The four words to describe UK regulation is more suited with four letters.

  7. Very well said and eloquently written Mr Bamford, you hit the nail on the head. Likewise Mr Billingham.

    However, until the regulator is accountable for its actions and failures there can be little hope of change.

  8. @ The Big Unit you pose a very good question, how indeed.

    Step one is not to stand quietly by when they make these unfounded criticisms but to challenge them. Being frustrated by it is an integral part of dealing with it.

    Step two must be to ensure that we always maintain the highest possible client facing standards and not to become part of the problem.

    Step three is ensure that those who purport to represent us (professional bodies and trade bodies) also challenge the erroneous statements when made by regulatory bodies or the media in the same way that you and I must as advisers.

    How disappointing that the CII/PFS and IFP have not publicly slammed the FCA Consumer Panel?

    Step four is to engage with the regulatory world and be critical of their poor performance but without it becoming an attack on individuals, personally.

    I remain optimistic that we will eventually be able to convince these people that they need cease their “adviserism”

  9. Nick,

    I have asked for a meeting with Ms Lewis – I am still waiting for a reply…

    In the highly unlikely event Ms Lewis agrees for someone from the ‘polluted pool’ to visit her in her ivory tower, would you come along? At the very least, can I quote your comments – I could not make my point any better

  10. @ Robert Ayley happy to attend if you secure a meeting

  11. “If trust has been destroyed then the blame lies primarily with a 28 year old broken regulatory regime that has patently failed to serve the consumer well.”

    Well said!

  12. I don’t think Sue Lewis genuinely has the consumer’s interest at heart. I think she wants to forge a career in the well paid sinecures of the “Consumer Champion” space, such as the FCA’s Consumer Panel. Inflaming the ire of advisers and providers is a key part of this personal strategy.

    If Sue Lewis was genuinely interested in working with the industry to help it change, see would not have spent two thirds of an article to financial advisers entitled “How do financial advisers win consumer trust?” telling us how bad we all are.

    The scatter gun approach of her preliminary comments further undermined her credibility with her audience by twisting the evidence. Why should anyone be surprised that less than third of people who have not taken professional advice were not aware of the RDR? Why would they be? Surely it is more of a miracle the nearly a third were aware?

    She has also twisted the findings of the FSA’s RDR thematic reviews to suit her agenda.

    The most useful passage “So what do consumers what?” was stuck at the end of the piece by which time most sane advisers would have lost patience with all the hectoring.

    Based on the evidence of this article and her previous examples of megaphone diplomacy with advisers, I can only conclude that she’s not really talking to us – but the journalists who write the articles saying what a fabulous consumer champion she is. But if I was in her shoes I would not want advisers and providers to change for the good – because then there would be no need for a job a Chair of the FCA Consumer Panel…

  13. Nick (and Phil) Of course you are both right. Nick and Robert Ayley – may I offer a piece of gratuitous advice – don’t waste your valuable time.

    As I have mentioned previously elsewhere, I had the misfortune some time go to sit in on a meeting with these jobsworths.
    They are the very exponents of the hot air brigade. (They do have one or two clued up people, but they are hopelessly outnumbered by the journalists, professional do-gooders and academics who are all pretty clueless and devoid of all logic. They take themselves very seriously and really believe that are doing a good job and enfranchising the less well off – who in the main would prefer the pub and a 40 inch TV to anything we have to offer.
    I could write an essay on the topic, but don’t want to raise your blood pressure. I would again remind you that the venerable Debbie Harrison – the renowned academic that though that Key Data was a worthwhile product – is a leading light in the FSCP. I had the distinct feeling when I was amongst them that they rather relish their iconoclastic role and happily pocket the stipend. (Which of course we fund).
    That the Regulator takes notice of them is also in some doubt. They have to be there, but the Regulator can – as they do with so much else – ignore them. I would go a little further and say that if the Regulator takes all their prognostications unedited, it rather shows that they too are rather out of touch. And I honestly believe that the Canaries are not that bad.

    The best thing that we advisers can do with regard to the FSCP is to ignore them entirely.

  14. @Tim – Can you provide a link to her full comments please?
    Anyone know how much and where we can find out how much each member of the FSCP is paid and how many days work they are supposed to do justifying their existence?

  15. “If trust has been destroyed then the blame lies primarily with a 28 year old broken regulatory regime that has patently failed to serve the consumer well.”

    Well said!

  16. In my experience during my time in direct sales – and as a broker consultant for Scottish widows in Edinburgh and Norf London, mate – who assume the role – of grabbing as much of peoples money as they can – for the pyramid selling scheme, and bonus/remuneration schemes within their business structure. If aan employee is paid – and a broker sconsultnat gets paid then each are given a ” bonus ” for business achieved – this would on the face of it appear reasonable. However, there are the assistant managers bonus the managers bonus the regional managers bonus, the Area Managers bonus the assistant sales directors bonus ( plus his colleagues in the ” marketing department ” ) and the sales directors bonus plus the Board of directors individual bonus CEO bonus and Chairmans bonus . . . .then there are ALL the employees who have ” shared in the success of the business ” – yet unaffected by reckless and poor administration. No incentive to operate any proper records – or keep any proper records – or provide clients with the correct amount of pension ( because the more the employees keep back – the more their bonuses are ! ). On top of this the reliance on New Business makes Scottish widows and other collaborative insurance companies – uncompetitive as they are unreliable and unethical. The constant flow of undermining advisers – their poor administration and general incompetence means, these insurance companies . . .are not fit for purpose. HIgh charges against clients should be reviewed by the FCA – and returned to the clients – as being legalised Fraud Deceit and deception – and the huge salaries and pensions funded form these Mutual insurance companies – and now commercial companies – should be returned to the shareholders. Scottish Widows whose chairman is another Tory Grandee – taking over from Win Bischoff – often referred to as ” their Big Guns ” and Angela Knight – used to influence the government and the press . . . . . . are constantly undermining the Great work of Good Quality advisers . During my time at Scottish Widows they undermined advisers by inducements of higher commissions of up to some 180% of Lautro – using these as the stick – and the carrot. Advisers were required to meet the targets of Scottish Widows eg 30,000 Estiated Annual Premium to provide 120 % of Lautro etc., Then there was further increased commissions percentages – from ” the Area Manager ” then from ” Head Office ” ( John Bromhall Sandy Hogg New Tum Scott ) – and major National distribtutors – distorting the market – and deceiving clients – not unlike the distribution of Tesco against their product suppliers – and their black holes in finances . Such is the DECEIT of Providers – and the REMOVAL OF YOUR AGENCY if you refuse to ” toe the line ” IE Standard Life – and their removal of my agency for New business to Standard Life and to Fidelity . . . . . The poor business and unsafe insurance companies – where Gordon Brown intervened personally to assit Edinburgh Bank TSB – purchase Halifax Bank of Scotlan Scottish Widows Clerical Medical and St Andrews Life – demonstrates the cover up of Fraud and Serious Organised Crime at the highest levels in these insurance companies – and one reason – they CANNOT be trusted to look after YOUR MONEY – whether in savings or Auto Enrolment . Already Scottish Widows cannot Cope . . .in the same way they could not Cope with SERPs – yet it did noto prevent them continuing . . .and charging . . . ..and the PIA and FSA . . .did nothing to prevent them continuing . . .I wonder Why Not ?
    Interestingly a garden spider named ” The False Widows “, which I understand ( according to the BBC ) was after an ineffective, inefficient . . . . and incompetent . . insurance company of a similar name .

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