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Tim Page: Kafka, MAS and anti-adviser outbursts

Tim Page peach

The anti-adviser outbursts by Sue Lewis of the FCA Consumer Panel and Caroline Rookes of the Money Advice Service will harm consumer interests not help them. 

If you have read the recent Money Marketing articles and Nick Bamford’s subsequent comments, you will know Lewis and Rookes have embarked on separate Hector Sants-style campaigns of megaphone diplomacy by implying all financial advisers are crooks.

Before your blood boils, you should realise advisers are not really the intended audience.  I suspect Lewis and Rookes sense a change in the political winds.  I think they wish to protect their well-paid sinecures as consumer champions by attracting the attentions of their potential new Labour masters.

Other advisers have highlighted the factual inaccuracies, the dubious ethics of a public servant (Rookes) lobbying politicians and the potential harm to consumer confidence.

I want to point out how these statements will harm consumer interests by introducing moral hazard into financial advice market.

I don’t know about you, but what keeps me on the straight-and-narrow is a combination of influences.

I get immense pride from helping my clients reach their financial goals.  Some people call this ethics. All I know is that helping people makes me feel good. 

My clients know where I live.  They bump into me at the supermarket and refer most of my new clients.  If I was a crook the word would get around quick.  The damage to my social standing and finances would be swift and difficult to recover from.

The way I charge my fees aligns my long-term financial interests with those of my clients and this helps making good recommendations easier.

The regulatory system is (mostly) on the same side.  Virtually all the FCA and FOS frontline troops I meet are decent people who want the same good outcomes for clients.

But sometimes when I get really low I think the regulatory system is more like Franz Kafka’s The Trial.  Spoiler alert:  One day the protagonist is arrested for no apparent reason.  He then watches his life unravel as he journeys ever more desperately through a justice system which exists only for itself.  Eventually he is taken outside and shot.

I count myself extremely fortunate that I am in a position where my faith in regulation is just the icing on the cake.  Other advisers are less fortunate.  If you work in a firm with a poor culture and short-term incentives, ethics alone is a poor defence against misselling and a faith in regulation is the backstop.

Lewis and Rookes’ outbursts harm consumers by giving advisers the impression that the regulatory system is out to get them.  

If you think that, however compliant you are, you will eventually be taken out by the regulatory system and metaphorically shot, then you are less inclined to think about the client’s long-term best interests.

By implying that all financial advisers are crooks, Lewis and Rookes give those advisers who might be inclined to become crooks a justification for doing so.

So apart from being factually inaccurate, ethically dubious, harming consumer confidence and giving the few potentially crooked advisers the excuse they need, everything Lewis and Rookes have said is fine. 

Martin Wheatley needs to have a quiet word with both before they do any more harm.

Tim Page is a director at Page Russell

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. I see the MAS have now issued an apology for Caroline Rookes’ comments at the Labour Party conference. Good.

    Now all Martin Wheatley needs to do is take Sue Lewis to one side.

  2. @Tim Page

    An apology that starts “We are very disappointed that Caroline’s comments have been misinterpreted…” is not an apology at all.

    She either said the words she said or she did not say them which is it?

    If she said them the only thing open to her is to say “I am sorry I was offensive”

  3. I meant “misrepresented”

  4. Hardly an apology! Even so, the damage is done, the cat is out of the (her) bag. She needs to address advisers directly, via the MAS. Using th PFS as a conduit is pathetic.

    I have been around long enough to not let this stuff wind me up too much but rarely have I felt so angry. Why dont we all lobby the TSC and let them have a go at her?

  5. There’s another way all this grandstanding from Sue Lewis and Caroline Rookes harms consumers: by frightening away firms who are thinking of investing in the UK financial advice sector with innovative ways of engaging with UK consumers.

    I can’t help contrasting Holly Mackay’s breathless report in MM on her trip Finovate in the USA with an account I heard last week from a doyenne of the UK long-term savings world who now sits on the main board of a South African life company. His verdict: From Cape Town, the UK regulation looks too aggressive and the competition in the UK market is too fierce to risk significant future investment, they would prefer to take a punt on Zimbabwe!

  6. She knows and knew exactly what she meant and in the context she said it, crikey these people have an army of minions to put this stuff together, which by the way, she personally, has not apologised at all for, its just some half arsed statement from Ma !!

    All I see now is, MAS is becoming a political tool like the FCA, otherwise what the hell was she doing at a Labour fringe event ? all this is becoming less about doing the job and more about personal gain and jockeying for position !

  7. Ms Rookes did NOT apologise. MAS have trieda lame apology as Nick Bamford points out.

    BUT Ms Rookes said “Personally”, she was not (by using that word)implying it was MAS’ opinion, it was her own, so it is Ms Rookes who needs to apologise PERSONALLY and we are all still waiting.

  8. Rather lame of the PFS to circulate the email as an apology when they should be pushing back and demanding a full, personal apology and retraction for the original comments. “I’m sorry IF you were offended” suggests that advisers are to blame for being offended by the comments.

  9. Imagine if she had instead said

    “All authorised and regulated advisers are members of a professional body and have signed up to that organisations code of conduct. So no, I am sure that there are a few bad eggs, but by far and away the majority are honest, ethical people helping their clients achieve financial security and peace of mind”

    I would be among the first sending her a congratulatory note

  10. @Nick – You have just given her a get out in that she could apologise and make a PUBLIC rather than fringe conference comment instead.

  11. @ Nick B

    Imagine, eh?!……..keep waiting Nick! You may wake up soon. What a shambles eh?

    We are all working our prverbials off to improve our profession and with one ill thought comment (just as well not with a wider audience), she could have undone several years of hard work by advisers, who want to be here, in this space and our regulators, who claim to want us to be here too with improved professionalism.

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