Mel Bousted asks why two different life offices take different approaches to the compliance aspects of handling new entrants to a GPP, both of them sincerely believing that their way is satisfactory to the regulator. Very probably, both of them are.
The reasons for this situation are simple, obvious and manifold – failures(and waste) on the part of the regulator.
Failure to consult the industry before churning out yet another in its endless stream of initiatives.
Failure to think through what practical problems might arise with their implementation.
Failure to identify the scope for varied interpretations of what is required.
Failure to provide adequate guidance on the issue of interpretation.
Failure to provide any useful feedback on submissions from those charged with implementing each initiative.
And failure to be consistent in what interpretations it does eventually approve – when those charged with operating these new practices ask for guidance as to how they should go about putting them into action, the response tends to be “do what you think we might want and we will tell you whether or not your approach is acceptable”.
Oh yes, and if we don't like your interpretation, we won't actually tell you why. Rather, we will just send you away to try again. Better luck next time. Really helpful, that is.
Thus, the result is a disparate array of different procedures, yet many of them apparently acceptable as far as the regulator is concerned.
I suppose it all depends on who happens to look at a particular submission on a particular day and in what kind of mood they happen to be at the time.
At this rate, advisers will be selecting product providers, as much on any other parameter, on the strength of their particular compliance procedures for certain types of business.
Provider X does it this way while provider Y does it that way, which seems to us vastly more cumbersome and inconvenient, so we will go with provider X. It could happen.
Such chronic inconsistency strongly suggests a severe lack of coherent management practices at Canary Wharf. Rather than forever beating the rest of us about the head with big sticks, ought not the FSA make a concerted effort to set its own house in order?
Experience to date suggests that this is probably a futile fantasy. But we live in hope. Who knows? The FSA may yet be defeated on CP121.
WDS Independent Financial Advisers,Kingswood, Bristol