Meanwhile, the editors of the Oxford English Dictionaries took a different view, choosing ‘selfie’, “a photograph that one has taken of oneself, typically one taken with a smartphone or webcam and uploaded to a social media website”.
Suffice it to say, the financial services industry would do well to expand and accommodate an abundance of geeks. At the same time, it would be encouraging to believe that having recognised the dire shortcomings of its current public image, it will face up to tackling head-on the challenge of presenting a much more positive “selfie”.
The motto of the London Stock Exchange, often a more general financial byword, “dictum meum pactum” - my word is my bond - is nowadays regarded by many with understandable scepticism if not downright contempt. People are prompted to seek comfort in nothing less than a written contract. This is of course right and proper, however the complaint of many working in the industry is, that while clear explanations are absolutely appropriate, providing too much information and detail serves only to confuse the vast majority of clients. In many respects, clients want only the key to their new home, a financially secure retirement or an investment that behaves in the way they have been led to believe it will. They have little desire to settle down to become mortgage, pension or derivative experts by reading vast quantities of complex text. Full disclosure is a very positive concept fuelled by wholly well-intentioned motives; where it sometimes falls over though is in the practical delivery.
When the metamorphosis of the FSA into the FCA came about the new regulator went to great lengths to explain what it expected from industry practitioners. In spite of this, a number of firms continue to struggle with the implications of the post-RDR environment, the cause of confusion being that the new regime is based on principle outcomes and not a code of explicit rules. The FCA is no longer dictating to advisers how they should go about the provision of advice, more that advisers should be guided by outcomes ensuring that they are always in the client’s best interests.
It seems ironic. Just when a regulator comes along that is trying to introduce a looser rein there are some who still suggest that more tightly defined rules and regulations are the right answer. But surely this was where the problem lay. Prescriptive regulations make for bigger rulebooks; they do not create higher standards. Indeed, they set out minimum standards, which are a long way from good practice and even further from best practice, which inevitably varies from client to client depending upon their precise individual requirements.
Due diligence and suitability will continue to be high on the FCA’s agenda in 2014. It readily refers to Keydata and Arch Cru as clear examples of inadequate due diligence around investment recommendations. The key element is that advisers should not rely on providers’ glossy marketing material. Certainly, this in no way demonstrates that the adviser is acting professionally and in the interests of the client. Relying on true facts however, is another matter. Factual information received from a third party is acceptable, what cannot be taken at face value is opinion.
As for the “selfie” that the industry will be taking in the years to come, that is an entirely different matter. The constant repetition of good practice and the consistent aspiration to achieve and apply best practice for each client are the factors that will determine the reputation of the industry. It is not for the industry to dictate what the public should think of it. Trust has to be earned and bestowed not just demanded. To use a much older expression derived from Plutarch, the industry must emulate “Caesar’s wife”, a party required to be above suspicion.
Tony Vine-Lott is director general of Tax Incentivised Savings Association
