Regulation  

Secret IFA: The world is blighted by mismanagement

Secret IFA

It doesn’t matter where you turn, everyone seems to be shooting themselves in the foot. Without thinking we could all rattle off half a dozen examples of outrageous behaviour – the sort of behaviour that drives me into an apoplectic state. My personal half dozen include BBC payoffs, the NHS scandal, and MPs with their snouts in the trough.

As always, the financial services industry is no better; ithas been shooting itself in the foot for so long it’s hardly got a leg to stand on.Take the PPI scandal. The banks got it so wrong when they sold PPI, yetnow they can’t be trusted to deal honestly with the claims.

Any talk about improving public trust in financial services is just hot air because the scandals keep coming. Fancy a quick Libor fix anyone?

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It’s so damned frustrating – thoughnot half as frustrating as watching those that make and enforce the rules, continually getting things wrong.

The regulator had the best part of six years to get adviser charging right, bet barely six months after RDR starts, they are raising concerns about percentage-based fees. If after six years theyweren’t capable of creating an adviser-charging regime that worked, they should probably keep my mouth shut.

And although it’s early days, the RDR is not looking likean outstanding success.Where are the vaunted ‘simplified advice’ services that would to cater to the mass market? The masses must now fend for themselves because banks have shied away from advice and, anyway,‘execution-only’ services make more money with less risk.

When you look at it like that, what bank wouldn’t want a slice of Hargreaves Lansdown’s action,with no advice issues to turn round and bite them? Are these unintended consequences, or the consequences of regulation by a bunch of overpaid Muppets? It’s a hypothetical question you understand.

Even more frustrating is experiencing first-hand the regulator’sknee-jerk solution to a history of regulatory failure. They throw more money at it – my money, your money, our client’s money. I don’t see any evidence they feel constrained by a budget. Unlike the rest of us I might add.

As frustrating as all this is, more maddening is how senior regulatory staff can walk away from failure with impunity – straight into senior roles within the industry they’ve been regulating. In a way it’s like a member of the Cameron’s inner circle being a lobbyist for a tobacco company. There really is something rotten in the state of Denmark.