Regulation  

We've come a long way in my time

Kevin O’Donnell

Kevin O’Donnell

Back in January 1989, 29 years ago, I joined Financial Adviser as a rookie reporter knowing little about financial services and with only a vague idea of what an IFA was.

In those days, the financial adviser sector was akin to the Wild West. The joke was there were fewer cowboys in the real Wild West than there were in the UK IFA sector. Those comments weren’t far wrong, or at least it seemed that way at the time.

It was in the days of commission free-for-alls, qualifications which would not have troubled the average 14-year-old and questionable ethics. Regulation was weak. In reality, apart from a few brave souls beginning to talk about financial planning and wealth management, the fact was that many insurance salesmen had simply shifted across to the IFA sector because the pickings were richer.

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I well remember numerous calls to the Financial Adviser newsroom from disgruntled IFAs complaining that their bosses had cheated them out of a commission payment. It was huge fun to write about.

It was days of self-regulation, with a myriad of self-regulatory bodies such as Fimbra, Lautro, Imro and others. Some firms could even choose which regulator they fancied being regulated by. It seems unbelievable now.

Forgive me the nostalgia, but I remember chatting to regulators over a drink or two, and in those days they quite liked having a drink with journos. They regaled us with stories of IFAs running IFA firms alongside mini cab and building businesses. One IFA even allegedly ran a massage parlour on the side (sadly I never found out if this was true).

Happy times, at least for the commission-based IFAs but perhaps not so good for the clients who were mis-sold in epic proportions, creating a new industry of ambulance chasers which still thrives today. It’s interesting to speculate whether, if the IFA sector had been set up properly with decent regulation from the outset, ambulance chasers  would have prospered but that’s one for the financial historians.

As I worked through various jobs at Financial Adviser, eventually becoming editor and then leaving in 2005, one view I had then which still hasn’t changed is that despite all the rogues there were very many decent financial advisers. I still think that today. Of course there are still too many rogues but today the financial advice profession has transformed itself beyond all recognition. It is rapidly becoming a respected profession.

And while many critics have rightly hammered IFAs over the years, including me at times, I have never deviated from the view that fundamentally most IFAs just want to do a decent job for their clients and earn a living. No more, no less. 

There’s no denying that two other major influences have also helped bring about this transformation: regulation and the move to professionalism. We’ve seen steady and welcome nudging from the regulators, pushing the IFA sector steadily towards a more transparent, fiduciary and fair future. There is still a long way to go but it was necessary to restore trust in a tarnished sector and I believe it is starting to do that.