Ken Davy 

Dump those bad apples and embrace SM&CR

Ken Davy

Ken Davy

It only takes a few rotten apples to add some very big numbers to every good adviser’s FSCS bill, so anything that will help us rid our sector of them is to be welcomed.

The news that the Senior Managers’ and Certification Regime (SM&CR) is going to be extended means the stars may at last be coming into alignment in a way that will revolutionise FSCS funding.

The FCA’s FSCS review, combined with the introduction of the SM&CR, promises to make 2017 an auspicious year for the great majority of advisers who are doing a good job for their clients and are fed up with paying for the actions of others.

Understandably, the introduction of any new regulation can cause trepidation across the adviser community. However, I believe that the vast majority of advisers operate conscientiously and responsibly, with a focus on producing good client outcomes, so will have nothing to fear from the implementation of SM&CR. 

For too long, a small minority of reckless, and even criminal, advisers have been given a free pass to conduct business that they know to be of poor value or directly harmful to their client’s financial wellbeing. Sometimes they then shut down their firm, thereby avoiding payment of recompense or regulatory action, only to then 'phoenix' in another guise ready to begin the whole disgraceful process again.

Consumers must be compensated when irresponsible advice leaves them financially disadvantaged. However, it is hugely unfair that the advisers burdened with contributing to these compensation payments are those who are blameless, and had no way of preventing the activities of the ‘bad apples’.

SM&CR aims to ensure those responsible for giving ‘bad’ advice are forced to take personal responsibility for their actions. It will also be much more difficult for them to move on and set up a new firm to continue to deliver the same poor advice with no repercussions.  

I believe these new regulations have the potential to significantly improve the sector for clients and every adviser who acts compliantly, and in the interests of their clients. Financial advice is becoming increasingly recognised as a profession delivering real benefits and value to consumers across the country.

I urge you to welcome SM&CR as a wonderful opportunity to reinforce those values and dump the bad apples into the compost where they belong.

Ken Davy is chairman of SimplyBiz Group

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