I had a catch-up meeting recently with Keith Richards (not that Keith Richards) and the conversation turned to rebuilding trust in the industry, along with some thoughts on the rights and wrongs of how best to do it.
Keith is a passionate supporter of financial advisers with a long and successful track record in that department, so his thoughts are certainly worth a consideration.
He has spent plenty of time ‘putting himself about’, which means trying to get the ear of the right people – politicians, consumer groups, the FCA, trade bodies, the ABI – and many more I am sure.
As you can imagine, this is a full time job in its own right.
Our discussion turned to the quality of financial advice and how, despite advisers’ views that their advice was always best advice, regulators and consumer groups may not always agree.
To illustrate the point, Keith drew the analogy of a motorist being stopped for bad driving by the police after an accident. The driver responds by saying that it was not his bad driving that was the cause of the accident, but that of his fellow motorists involved in the incident.
Essentially, the driver believes everyone else on the road was an idiot except him. It’s only when the police show the man a video of his driving – which is never a good experience I might add – that he can plainly see that the only idiot is him.
And so it goes with IFAs. His or her advice is beyond reproach; everyone else is rubbish, mis-selling is nothing to do with them and it is all other practitioners that are responsible for bad practice.
Consumer groups reckon that IFAs are the ‘least worse’ within the financial services industryConsumer groups reckon, according to Keith, that IFAs are the ‘least worse’ within the financial services industry. I am not sure that advisers would agree, but this the way they are seen.
Power today is not held by the regulator, MPs, select committees or indeed the Treasury. It is held by consumer groups, control of which is in the hands of a small number of very noisy, very well-connected individuals, who have no knowledge or understanding of commercial constraints or indeed wish to.
Their agenda is to see the particular consumer group they are aligned to as all-powerful, controlling politicians and regulation with no regard to cost, impact or responsibility if their actions mean unintended or unforeseen consequences.
These consumer groups are everywhere. In fact, anywhere there is a regulator you will see a consumer group in the back, with a highly dangerous driver directing them towards a right royal mess, if regulatory outcomes are to be believed.
To prove the point just take a look at all our nationalised utilities; healthcare, food, and education. The list is pretty endless, as are the failures.
Regulation, we are told, is a vital part of society. It is local, national, European and some cases global, yet despite its ever invasive, almost viral presence in UK society, it seems that the more consumer groups we get, the more we regulate and the worse it gets as a result.
And like the driver in Keith’s analogy, in just about every case, the consumer group will claim it is not their fault, but that of all the other idiots. After all they weren’t driving, were they?
Derek Bradley is chief executive of Panacea Adviser