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Tony Byrne: Why are there so few advisers on the FCA board?

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I recently received a letter from the FCA Practitioner Panel inviting me to take part in a 10 minute telephone survey to give my views on the FCA. It did make me wonder whether or not they have been reading my articles.

This prompted me to do some research into this organisation. I discovered that there are in fact three panels, the FCA Practitioner Panel, the FCA Smaller Business Practitioner Panel and the FCA Markets Practitioner Panel. Two of the three chairman are bankers whereas the other one is a risk management specialist.

So rather than having one bureaucratic organisation we’ve got three. And as usual bankers dominate.

I then decided to check the current membership of the FCA’s board of directors and surprise, surprise what did I find?  There are 12 members of the board which is primarily made up of bankers and people from large organisations and quangos with one token IFA, Amanda Davidson.

As the IFA sector continues to control the majority of the distribution of financial advice in the country it clearly makes sense for more of the board to be from the IFA sector rather than from banks, quangos and other large organisations.

The boards of both the FCA and the the practitioner panels need more advice practitioners in them to bang some heads together and give us some sensible leadership and policies.

How bankers can continue to dominate these boards is beyond me. They have been responsible for one misselling scandal after another and have proven themselves to be highly damaging to the reputation of financial services in the UK.

In my experience most bankers are not even good at banking let alone financial services. Without government support a number of banks would have failed at the time of the financial crisis in 2008.

Banks also continue to dominate the complaints to the Financial Ombudsman Service and have done so for many years.

Despite repeated attempts by the large insurance companies and the banks to eradicate IFAs in the UK, the public continues to vote with its feet and choose IFAs in preference to these large organisations. Bearing in mind the make up of the boards of the regulators it is little wonder IFAs do not have a big enough voice.

Independent financial advice is fantastic for the public. Why? Because it promotes competition, leads to a reduction in charges and results in greater product innovation.

Interestingly a number of large banks have stopped offering face to face advice to their customers unless they have typically £500,000 or more to invest. Instead they are focussing on internet selling and that’s the rub. A customer to a bank is just that, a customer. Banks like to flog their customer products.

It has nothing whatsoever to do with professionalism, with giving advice and building long term trusting relationships which is what an IFA does. It is still about hitting those sales targets.

Go to your own branch and you will find young staff willing to sell you a product but if you ask them a question about banking you’re likely to get a blank stare back.

So come on let us have some proper IFA representation in the FCA boards and get rid of the bankers.

Tony Byrne is financial planning director at Wealth And Tax Management 

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. I think we all know why the FCA does not have IFA’s on board. If the FCA had people who understood the advice market and what the ordinary man in street wants then those now in the FCA would be out of a job

  2. First and foremost what an excellent article by Tony Byrne. Please can we have some support from the vast majority of IFAs who agree with his sentiments.

    With regard to why, it seems obvious to me that the basic requirement for a place on an FCA panel is that you hold a position of influence within a bank or insurance provider to ensure the perpetual circuitry of FCA/ Bank/’Insurer ‘jobs for the boys’ culture.

  3. goodness gracious 25th February 2014 at 1:59 pm

    IFAs by there very nature are small businesses, working as a service industry, getting business on a face to face basis and talking to people. We let paraplanners look at the numbers.
    What the FCA and other quangos want on their boards, are not people persons but number persons, They frequently staff senior positions with ex civil servants (who like meetings amongst themselves only) ex Accountants (who like spreadsheets) and ex Bankers (who like money in their own pocket) from large companies with a decent bureaucracy background.This is to show a corporate image to the outside world, justifying work and salaries via number crunching, and not letting a potential free thinking people person, like an IFA, into their cozy little world. Lets face it, someone who looks at the big picture is a threat if you only are interested in detail.
    I would like to believe that Martin Wheatley, a free thinker by nature, will not be reigned back by these vested interests.

  4. Brilliant article which highlights what is wrong with the the way most of our country is run, not just Financial Services. I feel very much we are judged by the standards of the people who pass judgment, which says far more about them, their backgrounds and employment history than the industries they are supposed to serve. It has long been the case that the public would be far better served if all Senior Civil Servant appointments were made by independent panels that looked at suitability and experience rather than previous meaningless titles, where the applicant was educated, who they know etc.

  5. Notwithstanding what WE inside the industry know, there is a fundamental question in ‘ who actually appoints these people?
    If it is the Treasury they should say so. If it is Government, they should say so. Why is it that whenever the top politicians are confronted with questions like this, they have neither the decency or courage to front up, hence it remains a ‘ political’ issue since no one dares say otherwise. By definition, Government is ultimately responsible for ensuring that where financial legislation is concerned, truth and honesty is upheld and misdemeanour severely punished. A government itself must hold up its’ hand in a show of honesty.
    Maybe Andrew Tyrie and his team on the TSC should be trying to get to the bottom of all things concerned with the advice sector in this country and they should be given full approval for digging deep and rooting out the whole issue. Until the TSC has invested in it the power to take action and not be fobbed off by those who regularly show a total disregard, however guilty they are shown to be, nothing will change.

  6. The short answer is because we tend to be a stroppy lot. Amanda is a lovely lady, but not what you would call confrontational.

  7. This is a very good question, but the answer should come from the people who promoted these board members. Who are they and how can they be made accountable for their candidate choices? This goes to the heart as to why the IFA community finds many of the decisions made are sometimes irrational.

  8. Maybe it is a numbers game. Whilst there are 20k advisers there are 100’s of thousands of people working for banks, insurers, markets etc. They also serve (ahem) a greater proportion of the public.

    Proportional representation?

  9. Why don’t you apply for a seat on FCA’s board Tony? Or on the APFA board? No, scrub that last suggestion ~ you’d probably be tearing out your hair with frustration before the end of your first meeting.

    As for whether or not anyone at the FCA reads your articles, I think they probably do but firstly the left hand doesn’t know what the right is doing and secondly the FCA generally is almost certainly highly resistant to taking on board anything that anyone out here in the real world may have to say about anything. In their minds, they know best and they don’t want advice from any pesky intermediaries out here in the field actually interacting with the public and doing the job of advising them. Theory and practice are two very different worlds and not to be mixed into some sort of unhappy emulsion. Plus, of course, the FCA is an arm of government and much of what it does is steered by its masters at the Treasury. The only way in which it’s not a government body is the way in which it’s funded.

  10. Comment testing 3. Please ignore

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