I suspect a large majority of firms are already carrying out much or all of what the regulator requires and is focusing on.
However, such missives can obviously be useful in terms of knowing where the line of sight is for the regulator and in providing certain market participants with a shove in the right direction.
The three key areas of potential harm outlined by the FCA – consumers purchasing an unsuitable product, paying excessive fees and charges, and the risk of fraud to all stakeholders – should be widely understood and, certainly for advisers, on their radar as standard practise.
For those businesses like ourselves who are responsible for large numbers of broker firms, we stay very close to and focused on the regulatory requirements and this is a constant review process.
But it’s still worthwhile for the regulator to address the sector, outlining its own priorities and reminding market participants of their responsibilities.
Action is vital
What is perhaps even more vital here is the action that regulated businesses take when they come across bad practice within broker firms.
Quite frankly, it is fine having systems and processes in place, but clear and decisive action must follow when poor work is discovered, whether it be deliberate or otherwise.
Networks routinely suspend advisers when it has been found they do not comply with the firm’s practices or meet the required standards, and we make no bones about terminating the contracts with firms and de-authorising if breaches have been serious enough to justify this action.
It’s perhaps what happens after this that will go a long way to improving standards across the industry.
Stop bad apples reappearing
Those serious infractions which have resulted in consumer or firm harm must be widely understood and known such that firms have access to that information in order to make decisions about who they are authorising.
Sometimes it feels like it is too easy for poor advisers to resurface elsewhere and to continue running the risk of consumer detriment, when they have been censured for poor conduct by other organisations.
There will always be bad apples in any industry, but when those individuals are found and dealt with, industry participants need to take clear disciplinary action and prevent advisers from popping up elsewhere with the risk that they would continue to deliver poor advice.
We are committed to ensuring all our advisers and firms work to the highest standards, which doesn’t always make us popular.
In fact, in the trade press recently, I have seen us referred to by advisers as ‘harsh’ in compliance terms.
Given the need to improve industry standards and consumer protection, I’ll take that as a compliment.
