In principle, I agree with it whole-heartedly, not only with regard to TCF but with all matters that one should engage closely in with the regulator.
However, I think there are two points that may have been overlooked. The first is that I would welcome a visit, provided it was in the spirit of guidance and not censure.
Indeed, I well remember when starting Norwest Consultants in 1990 that I rang Fimbra and asked them to come in for an inspection, much to their amazement.
Quite simply, this was harking back to my pre- vious experience of factory inspectors and based on the principle that it is better to find out as early as possible what it is that you are doing wrong rather than allow bad practices or erroneous systems to get entrenched.
The problem is that the regulator seems to have engendered the impression that the inspections will be censorious rather than offering guidance, which is a pity.
The second point rather flows from the first although we can follow the principle many of us feel that TCF is not explicit enough and we are suspicious of this particular initiative which is designed (so many believe) more for the benefit of the regulator than for anyone else.
What worries us is that in future we could be proved to be in breach of being unfair, notwithstanding that the clients may be satisfied.
The problem is that TCF will, in the last resort, be an opinion rather than a matter of fact and that, in my view, is not a way to regulate.
You need to regulate by fact and if you are going to regulate by fact, then there is no reason at all why this can’t be enshrined in proper written rules.
On the one hand, the adviser community smarts from what has taken place in the past – the pension review, contracting out, endowments, zero-dividend preference shares, Scarps and so on. We worry that this will be regulation by edict and made up as it goes along.
This may be unjustified but I am sure you will agree – somewhat understandable. It is not over-cynical to postulate that the regulator formulates policy merely to protect its own back. This is also understandable. The last thing the regulator wants is to be blamed for anything going wrong and therefore principles rather than rules will allow it to be right on more occasions than not.
I also agree that it is difficult to square the circle. Fimbra was criticised because Godfrey Jillings and his staff were seen to be too close and comfortable with those whom they regulated.
I would contend that the best regulation is by consensus and really ought not to be adversarial and I think that in the current environment both parties are to blame.
I think it is both admir- able and desirable that publications such as Money Marketing highlight these concerns and hopefully there will be more of us to work towards a more conciliatory and co-operative approach to the whole matter.