The proof of the pudding is, as always, in the eating thereof. Likewise with regulation - the proof is in the practical use.
Take the famous ‘advice gap’, which has been the subject of much conversation in the advice profession for many years.
We’ve often been left confused with the oxymoronic relationship between actions and words from those who regulate us.
On the one hand, the regulator, governing bodies and business owners have been paying lip service to the need to close the advice gap.
On the other, the profession has been left feeling rather bewildered with the increasing complexity of new regulations on top of old and rising indemnity costs.
I’m a firm believer that the regulatory framework has exacerbated the advice gap problem.
Any sensible business would invariably be left having to think very carefully about who they work with, to ensure there is a balance between client value and the firm’s ability to operate profitably and effectively.
Anything to streamline processes for those with simpler needs is most welcome and I wholeheartedly hope it leads to a greater exposure to advice and an ability for those giving advice to be able to do so with much less friction.
I would love nothing more than to spend more of my days helping people, rather than satisfying audit trails and ticking boxes. I would also love nothing more than being able to charge less to clients for such a privilege.
I have however, never believed that the perpetual introduction of new supplementary frameworks is the answer to solve the profession’s friction.
The inherent subjectiveness that comes with these frameworks could leave us all more confused than we started, trying to work out which framework a client falls under and worrying now about whether we picked the right framework, rather than whether we’ve satisfied the current framework.
Who determines the ‘simplicity’ of a person’s circumstances?
If they insist on only wanting one area of advice because it’s lower cost, who is liable if they misunderstood other areas of their finances that were far from simple and were never ‘holistically’ captured?
Ethics is fundamental
I have always firmly believed in a values-led approach to regulation and management, where a strict moral and ethical code is instilled in all entrants into the profession right from the beginning.
Ethics is a fundamental part of the training for legal professionals, whereas ours seems to be much more about navigating the complexities of rule books.
This leaves very little creative license for a financial services professional with a strong moral compass to do the best thing by their clients.
I hope the new regime goes some way in instilling a values-led approach, which will naturally improve consumer outcomes and a more harmonious working environment for those giving advice.
