The FSA don’t like …….” “The FSA want you to….” “The FSA are trying to close down all IFAs”
I keep hearing these assertions. When I say, “well, sort of, perhaps not, and why do you say that”, then the answer is very like the lyrics of that well known REO Speedwagon track. (If you are under 40, ask your parents about it!)
In short, the answer is that it’s from somewhere in ‘The Noise’. Blogs. Citywire/Financial Adviser/Money Marketing headlines. Bar chat. And especially Compliance paranoia.
It’s rarely, if ever, from any direct analysis of what the FSA actually said.
So I often find myself in disagreement with ‘The Noise’. And sometimes that means I am in disagreement with their friends / business partners and compliance staff. Whilst that is OK, it does lead to some fairly sterile ‘well I heard from…..’ debates.
It also leads to some surreal ‘The bogeyman lives under the bed’ conversations. Which can be frustrating. It also allows those parts of ‘The Noise’ with an agenda to push, to do so. We all remember the UCIS Product Provider emails stating ‘You must sell these products to remain Independent’ don’t we? (And you do know these were lies, yes?)
So why don’t we just read what the FSA have ACTUALLY said, and THEN debate it? We can then discuss what, if any, impact the subject will have on your business and your clients, and work out what to do about it.
When challenged, the normal answers are ‘The FSA publish so much material that I can’t possibly read it’, or ‘That’s what I pay XYZ for’.
Taking these in turn:
I agree, the FSA publish LOTS of stuff. Most of it is of no interest to you. But each year there are probably 5 or 6 papers that do directly affect you. Much of this is well reasoned and well written. You should read them. Yourself. Don’t be put off by ‘The Noise’ that says it’s 150 pages. Most of that is appendices, past respondents etc. There will often only be 10 to 20 pages of real content. So perhaps 100 pages of well spaced large font text a year to read. You can probably cope with that. It will take 3 or 4 hours a year to read. At most. You may not agree with everything that you read, but that’s the way of the world.
Truthfully, each Consultation Paper should take you less than an hour to read, scribble on and digest. You can do this whilst watching ‘Suits’ and drinking a glass of Wine. Don’t ask me how I know this…….
By all means then find out what others think. Your business partners – internal and external – and your Compliance support are important here. But it is your business, and you carry the regulatory and commercial risk – make sure you understand the key issues.
That leads us on to ‘I pay XYZ to read that for me’. Well, sort of. The issue here is one of regulatory creep. The pattern is that the FSA draws the line at say a 3. The media says that is a 5, the Compliance firm says you better plan for a 6, and the internal Compliance staff call it a 7 to be safe. You then get presented with that, and go ballistic – and then blame the FSA!
In real life, you may have been very happy with a 4. Who runs their firm down to minimum standards, after all?
The follow up to this is that ANYTHING related to any form of regulation is labelled as the FSA’s fault. These include: CII pass marks. The amount of Gap Fill we need to do. Anti Money Laundering regulations. Disability Discrimination Act. Data Protection. You get the picture.
So we rail against the FSA for forcing us to get Terms of Business signed, having to list all the possible products that we might have used in a Suitability Report, giving a fresh Business Card at every meeting, trying to put risk warnings in Tweets, unable to use Twitter at all, and the list goes on. But in reality, all of these ‘Requirements’ are made up by other people in the Compliance function, and are not, as set out, real FSA rules at all.
In relationships and in life we are very careful about ‘I heard it from a friend who heard it from a friend who…..’
Why then do we accept it in business?