People and Ethics 


Last Friday, we received two formal complaint letters from a CMC north of the border.  Surprisingly, they were for 'real clients' (of an ex-Member Firm) - our experience with CMCs is such that we would not be surprised at receiving a complaint in relation to Mr. Tumnus, the Faun in CS Lewis's children's story, The Lion, the Witch and the Wardrobe.  And, they were complaints that did actually relate to one particular investment transaction, dating back to 2012.

These two facts unfortunately represent the sum total of the verifiable factual basis for either claim.  Somehow, the author of each letter was able to bulk up his case with expressions of outrage, repetitions of largely irrelevant references to the FCA Handbook, and a string of falsehoods that were immediately perceived to be erroneous upon reading the file.   Five pages of this stuff is wearing on the soul, and raises serious questions about the integrity and motivations of anyone prepared to concoct it.   What seems clear is that, at some point in the process which led to the genesis of these letters, someone was happy to engage in some fairly systematic misrepresentation.  It would be unfair, indeed churlish, to seek to apportion the blame either wholly to the customer, or to the CMC - but it would not be unreasonable to expect that the production of such fictions was in fact a collaborative effort.  Indeed, the degree of imagination apparent in the fabrication of this kind of bogus narrative would ordinarily be beyond the capacity of a single mortal.

What is conclusive, however, is the sense that, at the heart of this process there is a kind of ethical void.  If business or regulatory ethics do actually have any relevance to such situations, then they have been set to one side, in the interest of following a process where the actual narrative does not matter, and the entire focus is on a particular kind of desired outcome.  No doubt, CMC firms such as this one feel able to tick any number of compliance boxes, in pursuit of their goals, whilst at the same time constructing a case which bears no relation to reality.  One entertained hopes that the advent of FCA regulation for CMCs might have brought about some qualitative changes in practice, but it appears that some leopards do not easily change their spots.

Clearly, people matter.  Their financial circumstances and the outcomes from advice matter.  Everything that financial planners bring to the table, in influencing those outcomes therefore matters.  But it's not just about people in themselves.  Professional advisers need to be concerned about ethics, partly because it would be naïve to proceed on assumptions about how customers might behave in the future, especially when strongly motivated by a particular kind of financial goal.  Indeed, we would argue that the Adviser's own ethical framework is paramount - it has to be based upon clear, established principles, and therefore not subject to the whims and dictats of changing circumstances or subjectivism.  If the Adviser is not consistently modelling his or her ethics for the customer, and if those ethics do not come first and foremost in every engagement, then how can we blame the customer when he or she 'plays the game' in order to simply get what they want?

ValidPath Advisers are a whole lot better than this.  Recognising that it takes only two letter-changes to degrade fact to fiction, and having a high regard to the truths of financial-planning, ValidPathers take their ethics seriously.

Kevin Moss, 10/06/2019