I recently had the pleasure of being invited to complete the Financial Conduct Authority’s small business survey, which is supposed to give the watchdog an insight into how its regulation impacts smaller advice businesses.
That set me to wondering what the FCA has actually ever done for us. Well, obviously there is regulation – reams and reams of it. Sadly, not all of it is any good either: much of Mifid II seems to exist for the benefit of somebody else.
It certainly does not help me run my business more efficiently, quite the opposite in fact, and it certainly does not help my clients.
I often wonder if we continue to get new rules and regulation because it has become an industry in its own right.
Scores of highly paid people must be employed to write this guff, and they would all be out of a job if we just decided we already had enough rules and did not need them any more.
So they continue to create work for themselves by finding new rules to create, whether we need them or not. Now, they are supposed to do that, yes, and I am sure they would argue that the above tomes of regulation are evidence that plentiful new rules are being created.
But if that is the case, why then do we still see cases almost weekly where the public has yet again been ripped off by rogue firms or individuals.
The regulation is meaningless unless it is enforced, and frankly it is not. Rules are only worthwhile if they are followed, and the vast majority of companies and individuals will follow the rules and act in the clients’ best interest.
These same people would do that anyway though, without all the rules, because treating the customer fairly is in their DNA, not a rule book. It is in the way they act, the way they think; in everything they say and do.
The ‘bad guys’ do not care about the rule book or the regulations, particularly when they will not get caught for ignoring them, and even if they do the penalties are lax.
It has been said before, but you cannot regulate ethics.
In the meantime, the public see the stories of others getting ripped off, and so the reputation of financial advice suffers and claims get made with the Financial Ombudsman Service and Financial Services Compensation Scheme, which we pay for and hence we suffer.
We charge that cost in our fees to clients, so they suffer too. So what has the FCA ever done for us? Not enough, frankly.
Darren Cooke is a chartered financial planner at Red Circle Financial Planning