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The intern from the FSA

When I told my fellow directors that the FSA was coming to visit us for three days, you will not be surprised to learn their initial reaction was not one of joy and celebration. Not that we have anything to hide from the regulator, you understand, just they felt it might be something of an intrusion on our work plans.

It is dead easy to be a critic. Many advisers complain that the FSA does not understand the IFA community and that its rules, guidance and principle-based regulation miss the point of what we are about. The FSA needs a better understanding of the IFA.

My colleagues were more pleased when I explained the FSA was coming to see us, not to carry out a supervisory visit but instead as part of a training programme to get a better understanding of what we as an IFA firm actually do.

This part of an FSA training programme is called a placement scheme. An FSA emp- loyee spends between three days and a week at a firm to gain a better understanding of its systems and processes and how its works.

In other words, the FSA is doing exactly what it is we want it to do and finding out what makes us tick.

Dave arrived here in Cranleigh on Monday morning and got started by attending our weekly team briefing where we all describe what the week ahead holds and what our priorities are on client activities.

This gave him the chance to meet the team and understand who does what. We gave him a briefing on the activities we had planned for him in the next few days.

I was laughed at by the team when I ended the meeting by asking: “Any other business?” As my wife and fellow director explained: “You only said that because the FSA is here. You normally say: ‘Anything else?'”

Our starting point was to describe the process by which we deliver our advice, implementation and review services to clients and to show him the working model for these services. Next was a role play for our new consultant.

You will have to ask our new man what he thought of having Dave from the FSA acting as the client in a role play where he was explaining investment risk but he did rather well. Dave joined in the spirit of the role play by asking the questions that we had prepared for him and not trying to demonstrate he knew more than the adviser.

Walking him through our client process from start to finish may not sound like the most exciting way to spend the day but if we are not prepared to share the detail, how can we expect the regulator to understand what we go through?

Asking him to sit with our administrator while she tried to get information out of a couple of insurance companies was probably a bit of an eye-opener and might help to put treating customers fairly into perspective.

Day two and I had promised Dave that I would take him to see a client so he could see how we presented review reports. Getting lost on the way to the meeting was not a set-up, as my colleagues know this happens frequently to the extent they are thinking of creating a website called www. We arrived in time and the client was his usual self, asking questions, joining in and showing Dave the best part of what we do to build enduring relationships with people who trust our advice.

We also showed Dave the way that these review reports are constructed and introduced him to the software we use for supporting our advice process.

Day three and Dave joined in our monthly board meeting. We use these to provide an environment in which we, as the business owners, make all the important business decisions. Having Dave present was like having a non-executive director. Sure, we might have been accused of a degree of showboating but we are proud of the way we run our firm and the meeting was like any other that we have held.

At no time during the three days did we feel as if we had to behave differently from the way we normally behave. It was relaxed and as informal as it could have been. What were the benefits to us and the FSA of these three days?

First, we should not comp- lain about the regulator not understanding us if we are not prepared to make the effort to help it understand. All IFA firms are different, even if they have areas of great similarity. We need to show the FSA that different does not mean right or wrong, just different.

Second, it was good to get direct first-hand feedback and a better understanding of the regulatory view on subjects such as the retail distribution and TCF.

I feel that after these three days, I have a better understanding of what the regulator is faced with and I hope that the FSA has a better understanding of our important issues.

The FSA needs more IFAs to participate in this scheme and the contact point at the regulator is Lee Hooker on 0207 066 3634 or Clive Parker on 0207 066 5140. Do join in and help us to help them.


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