What's going on at the FCA? 

The relationship between the Regulator and the Regulated is at times an uneasy one to navigate.  One would like to feel that the core objectives of both parties are essentially the same, that we have remarkably similar, if not at times identical objectives.  The idea that ValidPath, as a small Network, and the FCA might in some way be working as a team, with goals and values in common, is an appealing one - certainly preferable to the idea of perpetual conflict.  We willingly espouse the FCA's higher level principles, not merely because they are credible, but because we suppose that the FCA believes in them too.

And, at times, there are hints that this may be the case.  Rory Percival's recent, eminently practical, comments on the way in which IFAs demonstrate and document suitability were widely welcomed.  At moments like this, there is a comforting sense of reassurance:  not only are we thinking similarly, but here is evidence that the world of compliance is not quite as insane as we had hitherto feared.  Financial Planners like the idea that the world is consistent, that we may to some extent rely upon past events and practices, in order to plan and manage future activity:  in truth, we grasp at straws.

And then, at other times, we are reminded forcibly that we are here in order to be Regulated.  The existence of a Regulator is predicated upon the continued existence of a class of individuals or bodies where the relationship is defined by the nature of regulation.  Suddenly, we are not in any way or sense a 'team'.  There is no 'relationship' worth speaking of, other than a kind of absolute subordination.  The hike in regulatory fees for 2015 is an example of this:  in no other context would an increase of 55% be considered a 'reasonable' or 'fair' way of proceeding:  if IFAs were to set TCF to one side and try this kind of practice on their clients, we'd very quickly end up with no clients at all.  This is a heavy hint as to the essential unsustainability of this model of regulation: Aesop's fable about the Golden Goose seems very apt in this context.  But such self-evident truths are of little concern to the socialist engineers of this new form of augmented capitalism.

Of course, life is not just about money and direct costs, it's also about working practices, and the complementary or dysfunctional interaction between different bodies, processes and administrative systems.  There have clearly been major changes to the FCA's Approved Persons' regime.  We've noticed it in what appear to be straightforward cases - a procedure which used to take, at most, 3 weeks, becomes protracted, less responsive.  And we've noticed it in cases which are less straightforward - individuals with something in their history which requires closer attention.  FCA staff demand more information, and when we respond to the email, it turns out to be no longer a valid address.  We send repeated chasers to an earlier contact, to no avail.  Sometimes weeks (months) later, an FCA representative gets back to assure us that he or she is back on the case after holidays.  In some cases, where there is a degree of complication, the whole process has lasted around eleven months: no doubt, the FCA would argue that this was due to the complexities involved, but the reality is that one just spends most of one's time waiting, chasing and then waiting again.  Late on a Friday afternoon, we receive yet another demand for information which might have been supplied months previously, and our response on Monday morning goes off into the void, leaving the poor adviser twiddling his thumbs, and the client left in limbo.  TCF anyone?  Not at any level.

It's a mess.  So, how hard do you push, in order to achieve resolutions, one way or another?  It is at this point that one's natural desires for collaborative effort, based upon courteous commonality and shared goals and values, encounters the brick wall of the Regulator/Regulated dichotomy.  We have no influence.  Where an individual authorisation has been consigned to limbo-land for several weeks, apparently because someone has simply not read an email, there is no moral lever to be pulled.  The matter will continue to take as long to process as it will take the FCA to process it.  It is ironic that the FOS has built its own philosophy upon the concept of 'fair and reasonable', when the same values do not even remotely feature in this context.

Are there lessons to be learned?  There need to be, if we are not merely to be left griping and frustrated.  The essence of professionalism is to have a proper regard for the individual, something the Regulator seems unable to grapple with.  Our experiences at the hands of the FCA are a powerful negative lesson as to how we would not wish to be treated - and that understanding should feed through to the ways in which we treat our clients.  It's all about ethics, folks, but it always was.

For further reading (logged-in users)

Thinking about ethics
Changing our ethics


Kevin Moss, 09/10/2015