Illuminate live speaker Phil Billingham looks at the difference that does – or should – exist between the pre and post RDR world of advice, and the role the regulator should play in that change.

    No blog is complete without some random definition, curtesy of Wikipedia normally, so let’s get this one out of the way:

    “A professional is a member of a profession or any person who earns their living from a specified activity. The term also describes the standards of education and training that prepare members of the profession with the particular knowledge and skills necessary to perform the role of that profession. In addition, most professionals are subject to strict codes of conduct enshrining rigorous ethical and moral obligations.

    See? Great stuff there for any blog.

    The not-so-tenuous connection to this short blog is that we are looking at the difference that does – or should – exist between the pre and post RDR world of advice, and the role the regulator has or should play in that change.

    By way of continuing a tradition, a blog should have an example of a ‘four box model’ to demonstrate a point. So here we go:


    Taking each point in turn, I suggest without either high regulatory standards, or high professional and ethical standards, then what is left is ‘buyer beware’. Which, I am sorry to say, just does not work for financial services. I remember the 1980s. I was there. They were not the ‘good old days’.

    Moving across, the ‘regulated sales culture’ is what we have had in place since 1988. Which has sort of worked. Clumsy, inefficient but has actually very often protected consumers. But it has not created a profession.

    If we then look at the vertical axis, where we have a ‘fiduciary or fiduciary like role’, then that too protects consumers. We are the agents of the clients – where we are independent, that is – and have a duty of care to clients. And be fair, that is where the professional bodies, from Sofa to the Lia and PFS and IFP have actually been very helpful.

    But it has not been enough. Why? Because you always get idiots. You know, the ones who ask “Where does it say I can’t get my client to borrow against the house to invest in Cape Verde…?” The ones who want the kudos of a profession, but the wild west freedoms of ‘caveat emptor’.

    Which is where the top right hand box comes in. This is the happy space where high professional standards are matched and backed up by real rules that have real bite and real implications if some idiot wants to play fast and loose with clients affairs.

    This all sounds really great, but have you noticed the flaw in my argument yet?

    Of course you have. But, just to recap, the problem is this:

    To achieve and exist in this happy state of nirvana, it requires the regulator to recognise and understand that they are in the TOP right hand side box, not the BOTTOM right hand side box. In short, they must give us the credit for having higher professional and ethical standards in the first place, and then crafting rules that work alongside them, and not off on a diagonal from them.

    And even more critically, it requires the paramilitary arm of the FCA – the compliance industry – to understand this and not gold plate rules. Even worse, they should not be inventing rules, and trying to implement guidance from regulators that died years ago.

    • No ‘reason why not’ paragraphs
    • No disclosure rule on business cards
    • No ‘20%’ product provider spread’ rule
    • No signed TOB rules
    • No signed fact find rules
    • No fact find rules at all, if it comes to that!

    The world was changing prior to RDR. It has changed even more in the last two-and-a-half years, and will continue to evolve. We need both a regulator and a compliance function that understands that.

    Phil Billingham is speaking at illuminate live in London tomorrow. There are still limited places available –  register now.17 September – London
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