If you have not read Tipping Point by Malcolm Gladwell, some of what I say may seem questionable.
With everything that has happened in the world of regulation, advisers have to be even more vigilant when using any product, even when we think we fully understand it.
The methods I use in due diligence owe a lot to Bob Marriott, a valued ex-colleague and good friend of mine who sadly passed away recently.
We worked closely, performing due diligence on Section 32 plans, where their approach to GMP coverage was pivotal to their eventual output if benefits were taken pre-state pension age. His approach of persisting to the point of full understanding has led me to reject some products that have subsequently proved toxic to all concerned.
The news that the FCA budget is growing to a ridiculous level disappoints me, as did the comments attributed to Martin Wheatley, where he blamed the rise on being asked to take on more and more tasks. Well, Martin, try saying no or maybe putting some jobs off until later.
In my opinion, we will see the number of advisers fall by at least 40 per cent post-RDR. That will mean the FCA will then be overstaffed and costs should fall.
The FSCS must be reformed with the providers of products taking the bulk of the costs as should those who sold them, personally if necessary.
In my eyes, there is no difference between a car recall and a duff financial product. How Capita was let off so lightly over the Arch debacle baffles me. This is equally true of the auditors and legal advisers in Keydata.
So let us make some key changes and have an order of compensation when a product fails. This will not involve current advisers (unless they sold the products) as the eventual bill can be paid by the Government through the use of regulatory fines they pocket and then use general taxation. While we are at it, the MAS needs to find its funding elsewhere too. If it is such a benefit to the population to have the MAS, then they should pay for it.
Also, what happened to the regulatory dividend we were promised? As many advisers move to level six, the role of the professional body needs to be considered as a means to reducing regulatory costs.
This is not a time to shrug and accept more costs this is the time to call people to account so that the cost of regulation is not allowed to grow unhindered. This means a full and detailed review of how regulation works or, more correctly, rarely works effectively and at an acceptable cost.
Don’t get me wrong. I want a strong regulator but I want an economical one too, where cost benefit analysis is not mechanical but analytical.
We also need proper feedback. You cannot expect effective whistleblowing without knowing that action was taken.
Who you appoint to your committees as industry representatives need to be challenging and not there for the benefit of their ego.
Those non-execs need to challenge and to do so effectively, so an escalation procedure will be essential. Under corporate governance guidelines, no one should serve for more than, say, eight years and that should include any time on FSA committees.
Time may move on but being methodical and logical must apply to all in this sector. Doing something just because its has always been done that way is no reason for not digging deeper. I will always be grateful to Bob for teaching me that. I will miss him.
Robert Reid is managing director of Syndaxi Chartered Financial Planners