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Robert Reid: Don’t blame the compliance firms

Rob Reid glasses 150

Simon Chamberlain recently raised the point that compliance services do not take responsibility for their advice. But how can anyone hold them completely responsible for compliance on business they do not get the chance to execute and directly supervise? Unless they are integrated into the business, this is not even a remote possibility.

On the basis of Simon’s logic, can someone using a Gordon Ramsay recipe can sue if it doesn’t turn out ok? We now find out that when they do take a stance he suggests they should be sacked!

In the past I have heard compliance being described as the business prevention team. This may be mildly amusing but it is far from fair.

In many cases the advent of regulation led to many firms selecting less than suitable people for the role but more recently the quality and professionalism of compliance teams has greatly increased. They are, indeed the must be, part of the strategic part of any advice business rather than seeing them as a necessary evil.

Reviews of past business will not stop at the RDR, if anything they may increase as the movement of assets onto platforms accelerates. Services that offer consolidation must be offered on a fee basis, in my opinion, or bias will creep in. The recent number of firms offering to consolidate assets onto platforms has increased, I do wonder if that will enhance or dilute the overall quality of these exercises.

The maxim of “don’t shoot the messenger” is absolutely correct in this instance, it’s all very well disagreeing with a compliance team’s view but if you are not taking responsibility for the new course of action then just how much assistance are you delivering.

It’s easy to criticise but harder to so constructively, there is little point in profit today and compensation tomorrow, I recall some rough stats that indicated costs in a ratio to FSA fine of 10:1 and that is not something that many businesses can afford.


Since 1998, with the exception of 9/11, I have attended every Financial Planning Association annual autumn conference in the US and found they provide the ideal mental push for the remainder of the year and into the next.

This year was no exception and although there may be reference to local issues such as taxation, the core of financial planning remains fairly constant across international borders.

At this year’s FPA I was invited to speak on the topic of remuneration, i.e. the RDR’s removal of commission on non-protection business. There are similar moves in a number of other countries. The Netherlands is going one step further and capping remuneration while

India is less prescriptive and Australia lags on education but is up there on the move to fees, albeit with the dominance of tied distribution.

So regulation continues to spread across borders and in time, just as stock markets do at present, compliance trends in one country will spread to another.

The one downside of the conference this year was the FPA’s decision to push the certified financial planner designation above all else. If the designation had the same level of testing worldwide then I could understand that stance but given the variable levels in countries where the number of members and the number of CFPs are almost identical I found their strategy bizarre.

Robert Reid is managing director of Syndaxi Chartered Financial Planners

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  1. I would, of course, agree. Although clearly I have a conflict of interest to disclose 😉

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