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Take a DIY approach to industry makeover

As we head towards N2, it is important for financial advisers to take

stock of their attitude to professional standards.

Our experience of regulation for the past 13 years could be said to have

produced a dependency culture where people look to the regulator to tell

them about standards.

My question is whether the regulator is the sole source of professional

standards or whether such standards come also, or maybe primarily, from

somewhere else. What is the role for self-regulation and self-discipline?

One of the reasons I cut short my regulatory career and moved into what I

suppose I could call the voluntary sector – advising the LIA on its public

policy – is that I felt there was a significant role for a movement which

fostered professional standards for financial advisers. I have seen at

first hand in regulation the limitations of trying to impose standards from


We all know that no amount of legislation will make people moral. Whether

appropriate professional relationships or activities result from what we do

depends far more on our motivation and self-discipline, which is an

expression of the desire to do the right thing.

On a purely pragmatic level, the enforced, by definition, outnumber the

enforcers. No amount of threats, dawn raids, fines, rulebooks, etc, will

ever really work unless the enforced are people who wish to adopt

particular standards for their own good reasons and not because someone is

watching them.

I remember discussing with colleagues at the time when the Financial

Services Bill was first mooted how the new legislation could clarify the

roles of various organisations which had become embroiled in regulation

because there was no one else to do the job. The role of punishment would

quite properly go to the statutory regulator, leaving a much more positive

role for a trade association of trying to encourage and incentivise higher


That is even more the case nowadays when we have a fully statutory

regulator as opposed to so-called self-regulators. The role of associations

such as the LIA must surely go far beyond any regulatory prescriptions by

offering incentives to their members to become professional practitioners.

Of course, the other role of such associations is to lobby to change the

regulatory rules. We can try to alter the environment within which

financial advisers work but that is not really enough if we are ever to

regain public confidence. It is still talking about framework and not about


My conclusion is that the advent of a single regulator will give a

considerable boost to those associations and institutes which want to

foster higher standards. We now have a much clearer focus on what we are

supposed to be doing – not just dancing to the tune of the regulator but

looking more widely at how the profession can serve its public.

Regaining a reputation means you need to do things better so I would

expect and hope that organisations such as the LIA would be seeking

opportunities to make members more professional and more helpful to those

they serve.

Two areas have already made headlines. Both are of considerable interest

to the LIA and we have been a participant from day one.

First, the Financial Adviser Toolkit project, co-ordinated by the

Financial Services National Training Organisation and supported by most

industry bodies, provides examples of best practice in operating a training

and competence plan within an IFA firm. We hope this initiative will go

further. A series of workshops is planned by the FSNTO and supportive

organisations which will help IFAs to implement the ideas in it.

We have started a voluntary process here, encouraged by the FSA, whereby

the industry is looking to produce higher quality from the starting point

of the regulatory rules but taking the principles in them a lot further.

My second example is the ABI&#39s Raising Standards initiative. I know a lot

of IFAs are quite sceptical about this project so it has been interesting

in recent weeks to see the positive comment appearing in the newspapers

about the revised documentation to go to clients. One particularly

vociferous journalist has been tempted to praise the industry.

I think we should all put our weight behind working on the Raising

Standards initiative and encouraging the ABI in taking further steps down

this route. That is certainly what the LIA is doing.

Can we codify best practice in other areas? Take, for example, what I like

to call shop window issues – what the public sees from the industry.

IFAs often complain about the media but let us think what people in our

profession are doing to foster media comment or to give rise to negative

perceptions. What are the public seeing in the way that IFAs and insurance

companies hold themselves out in the marketplace? What do they gain from

the raft of designatory letters people have after their names? Are there

ways in which we can improve images which are being generated by the


I remember a few years ago, in an LIA initiative which was described by

BBC television as “the charm offensive of the industry”, the LIA put

forward point-of-sale literature which was used by many advisers. I am sure

it must have created good perceptions.

We let that drop through lack of support. Indeed, I have said to the FSA

many times that some of the excellent literature which it has been

producing should be circulated via IFA offices.

Generally speaking, the FSA has been totally unwilling to discuss this in

any realistic way. What can we do to make sure that everyone who sees this

industry gets a positive message from whatever they see?

It may seem a somewhat wacky idea but I wonder whether the industry could

start its own newspaper aimed at the public.

We do need to have a positive examination of the issues I have been

discussing. I would be interested to hear from anyone who agrees with this.


Dennis Holt

Born: Lancashire, October 28, 1948 Lives: In Kent with wife and three children in their 20s. Education: BA (Hons) History, University of Leicester. ACIB professionalqualification. Career: Lloyds TSB, 1970-2001. Started as a graduate trainee with Lloydsand became manager of a Liverpool branch in 1980. Held a series of positionin banking and insurance and became group […]

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