Profession needs individual practitioners, not servants of firms

My stridency is not merely because I am an opinionated centrist, but because I have, for nearly the past three years, been quantitatively studying the concept of professionalisation for my PhD – and I am hopefully submitting it soon, then on to viva voce.

Suffice it to say, I have examined many millions of words of academic papers, regulation, and legislation, and have broadly come to the conclusion that the then FSA was taking us towards becoming a profession, and RDR was a step in the right direction.

However, it has additionally led to diminution of the small local practice, and the rise of the national corporate, which my research suggests leads to a reduction in the trust placed in a profession.

This is intuitive, though, dear reader, we all know people buy people, they don't buy brightly coloured brands and snazzy logos – in general.

In 2012 it would have been much better to move to individual regulation.

Additionally, we had the SMCR, which removed the concept of individual registration with the FCA.

This introduced firms being responsible for issuing practising certificates, in combination with SPS providers certifying that an individual has done the CPD they are required to do.

Now, Nikhil Rathi, the latest chief executive, has a bit of a mountain to climb, as the large companies have moved in to dominate the lobbying space in the FCA, and three of those large companies (the CISI, CII and Chartered Banker Institute) have recently joined forces to create the 'chartered body alliance' – and they are the SPS providers.

These are properly called 'accredited bodies' and you can read all about how they are supposed to operate in the handbook.

In my opinion, in 2012 it would have been much better to move to individual regulation. This would be where the financial services register becomes a register of individual advisers, and the firms they work for take second fiddle to the individual registration.

The individuals would have recorded CPD directly with the FCA and the FCA themselves would have issued the practising certificates.

This was where the FCA went wrong, and continues to do so; it continues to devolve its responsibility to other parties.

The CII's failure to manage conflict appropriately may lead to a lack of trainees over the next year.

The real issue here applicable to people wanting to become professional financial advisers is that there is no clear and obvious route to an appropriate qualification. 

Those within training committees have a terribly difficult job building a training programme for trainees, and a potential collapse of the PFS/CII relationship makes calculating an efficient path to achieving a robust qualification all the more harder – especially if the firm's relationship is well embedded in the CII way of doing things.

The CII's apparent failure to manage conflict appropriately, as evidenced by its ongoing spat with the PFS, may lead to a lack of trainees over the next year or so while practice managers focus on changing ships to another certification body.

I am not one of those advocates of more skills-based training programmes, however my opinion is that exams should test theoretical knowledge and implementation thereof.

I have concerns that a more 'practical' qualification may miss out on ensuring the appropriate threshold knowledge is in place to being technically competent, as has been scandalously described across the MBA programmes delivered over the past 20 years (you can read this up in "Threshold concepts in business school curriculum" by Christopher Bajada et al).

I do, however, have every sympathy with the FCA – they have an almost impossible job. They have an industry of behemoths who pump out products for the consumption of consumers, and a profession of a few thousand advisers who individually look after around 8 per cent of the adult population.

It is impossible to regulate both effectively, and I really do feel that we need a professional regulator for the profession, such as doctors have in the British Medical Association.

What has gone on at the CII/PFS is an absolute tragedy, and a real failure to manage conflicts of interest, however, the greater tragedy is that the FCA still thinks advisers need to work for a firm in order to be a professional, and not that they should be celebrated and highlighted as individual practitioners.

We are currently servants of a firm, we should be servants of the consuming public, and the public will not trust us as a profession unless and until this is the case.

Daniel Elkington is a chartered financial planner at Keep It Easy Financial Planning