In his previous role as technical specialist at the Financial Conduct Authority, a role he performed for 10 years, Rory Percival was involved in some of the biggest regulatory changes of the last decade.
He also played a central role in interpreting and speaking about FCA findings and was the lead on designing the process for assessing advice firms.
At the end of 2016 he left the regulator, but he is still busy keeping a close eye on what the FCA is doing and helping firms stay compliant.
“I have always been a bit gobby. One big difference now is that I don’t have to be so diplomatic and I can say more now than I could say at the FCA,” he added.
In February, SimplyBiz Group hired Mr Percival to sit on the investment committee for the newly created end-to-end financial planning system Centra, and more recently he joined the board of pension advice firm Pensionhelp as a non-executive director.
Mr Percival said: “A lot of my work is speaking at conferences or consulting, where I go into a firm, ask questions, see what they are doing and come up with helpful suggestions.
“But with [SimplyBiz and Pensionhelp] it is nice to get my hands dirty again. I am doing the work because I can contribute to the way the organisations are developing, so it is a bit more hands on.”
And his views will come in very handy at a time when the pensions sector is facing massive change, none more so than with advising on defined benefit (DB) transfers.
The regulator recently announced measures from its latest round – number three to be exact – of thematic reviews into DB transfers.
Alongside its policy statement, was another consultation – round four – and a discussion paper.
Current requirements
Incoming rules state advisers must provide a personal recommendation to individuals to either transfer or remain in their current scheme, and the transfer specialist goes beyond just checking the numerical analysis of the transfer to assessing the reasonableness of the recommendation reached by the adviser.
The consultation paper included proposals that require pension advisers to obtain further qualifications in order to practice.
But the most contentious topic was on banning contingent charging following recommendations from the Work & Pensions select committee that these payments be banned.
However, Mr Percival does not foresee this proposal moving beyond the discussion paper to a consultation stage.
“With the Financial Advice Market Review, the FCA is very mindful about access to advice, so that would be one good reason why it would not progress.
“The other reason is technically it is very difficult. The FCA flagged up the problems with it in the paper.
“The fact you could just game it by having a non-contingent fee and a high implementation fee, in which case, you have not mitigated the price issue anyway.”
He believes the FCA will make noise about moving towards non-contingent charging but will not propose any rules, however, he cautions the regulator is likely to stress that firms work harder to manage conflicts.
“It would cause some real problems for the FCA. On one hand they would want to take a recommendation from a select committee seriously, but on the other hand, they would not want to be seen to be directed by politicians,” he added. With DB transfers, customer complaints and fears of mis-selling are front of mind for financial advisers.
Protect yourself
Mr Percival said advisers will improve service and can protect themselves from future complaints or regulatory scrutiny by improving the record-keeping of their clients’ objectives.
“As part of the assessment of suitability and review, I timed my exit from the FCA to be at the end of the project, because I wanted to see the state of the market at that time and having looked at lots of files, I would say head and shoulders above everything there is a lack of detail about clients’ objectives.”
Hearing Mr Percival talk, you would think he still had the ear of the FCA. But it is no surprise, considering how central his role was.
One thing that might surprise advisers, Mr Percival stressed, is that the FCA genuinely welcomes feedback on issues that arise out of proposed rules.
This helped him when he was at the regulator, particularly when he worked on suitability and risk profiling, which led to guidance on capacity for loss.
He believes that a significant number of firms are still not meeting the FCA’s requirement on capacity for loss.
“If you are not doing this properly you will be giving unsuitable advice to clients,” he said.
Yet despite these challenges, he believes that individually advisers are more professional. Improvements to the way firms behave are still required, but Mr Percival is happy to continue with that mission for as long as necessary.
Career highlights:
2018 - Present: Non-executive director, Pensionhelp
2017 - Present: Director, Personal Finance Society
2016 - Present: Director, Rory Percival Training and Consultancy
2006 - 2016: Technical specialist, FSA/FCA
1996 - 2006: Training and compliance director, Fiona Price & Partners
