Just over 10 years ago, I can remember walking down the road to my London office and wondering why a queue of people was snaking round the corner. It dawned on me they were waiting for the Northern Rock branch to open.
It would be a further 12 months or so before the financial crisis really got into full swing but, despite the amount of time that has passed since, we are still being impacted. The financial services industry, regulators and politicians are very aware that the potential for a further crisis, while unlikely, cannot be ignored.
Recent speeches from Bank of England governor Mark Carney and FCA boss Andrew Bailey have highlighted current concerns. The fragile economy is clearly a priority but there is one key area where advisers will have a big role to play over the coming years: helping the ageing population.
The ageing population represents a major focus for regulators, attracting significant attention from the FCA’s senior leadership.
Thinking differently about how best to support individuals in later life means looking at areas like equity release or lifetime mortgages through a different lens and ensuring that, with the advent of pension freedoms, people are really wanting to do the right thing.
This is where the role of the adviser becomes so critical and the industry has an opportunity to build on the improvements seen over recent months, as evidenced by parts of the FCA’s suitability review.
Many will argue they have always dealt with older clients but the release of the FCA’s Occasional Paper on the topic, as well as the findings of its first Financial Lives Survey, brings a new focus. Firms are being asked to consider more carefully and creatively the way in which they communicate and engage with such clients as they live longer.
The regulator is striving to see standards of conduct improve through its culture and governance focus. Next year will see the Senior Managers and Certification Regime come into force. Before that, the implementation of Mifid II and the General Data Protection Regulation will also focus on overall governance and senior management responsibility. Expectations on firms and individuals are increasing.
Firms may not be in a position to provide all the specialist services their ageing clients will require themselves but advisers will already be used to working with third parties such as fund managers and platforms.
They may want review what other specialists they will need in order to provide equity release mortgages and pension transfers, for example. Ensuring the quality of due diligence both initially and on an ongoing basis will be vital. As they are looking to engage specialists for skills they do not necessarily possess themselves, the challenge is in making a sensible decision on the competency of the third party.
While firms need to be proportionate in their approach, not accepting everything told at face value is a start, even with the largest of third parties.
Trying to get an understanding of the culture of the firm can be useful in determining whether you share an aligned view on the FCA’s ageing agenda, for instance. Looking at the way the third party positions itself in the market, the way it promotes itself, can help form a view as to your rationale for using it, demonstrating reasonable steps to the decision to do so – something the regulator may judge you on in the future.
So, 10 years on from the financial crisis, we are seeing signs of an improved reputation and trust developing. But it needs to continue. Meeting the challenges created by an ageing population is one way it can further evolve.
Simon Collins is managing director at Eversheds Sutherland Consulting