The biggest single issue facing financial advisers is improvement of reputation. Just about every subject which generates furious debate in the sector comes down to the perception either that the adviser is not respected or that derogatory comment is going unchallenged.A major subset of the reputation issue is the desire for perceived professional standing, with all the trappings that a professional would have, including a professional body. Of course, a professional body in this context would be quite different from the traditional professional bodies such as the Law Society, the Institute of Chartered Accountants, etc, which were set up in quite a different era and which include regulatory functions. Most of the regulation of marketing and advice in the life insurance, pension and retail investment sector has been added to the statute book since the mid-1980s. Prior to that, regulation was sketchy in the extreme or widely ignored. Nevertheless, the creation of a professional body for financial advisers did not, so far as I can establish, seriously come on the agenda until after statutory regulation came in. There were discussions about issues such as licensing of individual advisers but there was no consensus to implement this approach. I well remember as an official of the DTI in the 1980s discussing some of these issues with practitioners. The LIA was in the forefront with constructive solutions, which I eventually came to work for around the time of A-Day in 1988. I well remember delivering an address at the PIMS Conference in 1988 on how advisers could demonstrate their professionalism through externally verified tests of knowledge (that is, exams), through continuing professional development and practice stand-ards. It was only some years later, after the PIA was formed, that we started to get some encouragement for this approach to be run in parallel with the regulatory system. The industry discussions in the mid-1990s under the heading of the Profco group put forward a plan which was supported by the PIA. This would have brought just about every organisation relevant to the adviser into one professional body. But vested interests defeated this approach. My view remains that the failure of the advice sector to grasp this nettle led to further regulatory intervention, the FSA and misselling issues. Principles-based regulation does give us a new opportunity but this opportunity will only be realised if the industry and the regulator will agree that a body such as the PFS has a relevant role in establishing and developing practice standards. The PFS exists within the CII Group. The CII has a code of ethics and conduct binding on PFS members. The CII also has a raft of examinations and learning solutions. It has a compulsory CPD scheme. But adding to this clear communications on practice standards and proper dialogue about the objectives of various facets of advice and financial planning is the new challenge. Without industry and FSA support, the future of such an approach is problematic in the extreme. That is the next debate.
John Ellis is public affairs director