Another round of invoices have been issued to cover the costs of the Financial Services Compensation Scheme, with the promise of more to come. Many are aggrieved at this unfair system and the expectation that businesses can just find spare cash to meet the failings of others.
What is more galling for some is that some of the miscreants are not even doing the same role as them, due to the segmentation that puts firms in particular categories.
Many IFP members have raised this injustice with me. A proper solution needs to be found and presented to the authorities for consideration.
If nothing is done, good work and professional behaviour will be undermined.
Part of my thinking about a solution comes back to greater clarity on defining the roles that individuals and firms perform for their clients. At a meeting of wealth managers recently, there was a debate about how they were different to other forms of advisers and should be treated differently. There are two points of view here. If the question is being posed because these organisations are looking for different or lesser regulation, then it is not worth pursuing but if there is a desire to properly define wealth management as a category that could sit alongside a properly defined financial planner and financial adviser, firms could potentially elect what service they provide for their clients and which segments they are in.
The client is not going to be better informed by the changes that come in at the beginning of next year. At the moment, it is pretty certain there will be less access to advice and a market which is wildly ranging in its possible split between independent and restricted. Would it not be more sensible to create service models that would perform certain functions for the clients? It would be reasonably straight-forward to set out some criteria for these services to ensure the consumer would be able to select against comparable criteria and expected outcomes. None of this would be related to products. Some businesses could potentially offer advice, financial planning and wealth management to the same client.
The IFP has found, with the establishment of the accredited financial planning firms’ register, that it is possible to define a service proposition and draw consistency from the market to better present relevant solutions to the consumer in a language they understand. The Great Minds Think Alike campaign starts this month with the intention of better informing the consumer of the benefits of financial planning and how it can bring positive change to their lives.
Solutions are required to better engage with the consumer at a time when, once again, we have failed to deal with the simplified advice issue. Later this month, I will be taking part in international discussions which look to define and differentiate financial planning and financial advice as two distinct services. This is not a new topic but if we start from the consumer and build services that they can engage with and trust, there is a strong possibility that regulators will listen to proposals for change.
Nick Cann is chief executive of the Institute of Financial Planning