Collaboration – not confrontation; the FCA and whistleblowing

The issue of whistleblowing was a theme of a Money Marketing conference I was involved in during the week. Debbie Gupta used her platform as FCA keynote speaker to call on IFAs to raise the standards of their profession by whistleblowing to the FCA on bad practice (report here)

The article is at the top of MM’s most read and has attracted many comments, mainly from IFAs. Having been involved in whistleblowing on what was going on in Port Talbot , I was on a panel after Debbie and felt an aggrieved mood among the 300 delegates.

Advisers feel aggrieved , not because they don’t agree with Debbie in principle, but because in practice, whistleblowing is not something that the FCA has in the past supported.

What the underspend has meant is that many advisers’ complaints have not been followed up and advisers have continued to see bad practice despite their whistle blowing.

Witness the work of Angie Brooks , who continues to point to FCA registered individuals involved in shady practices that inevitably lead to litigation and compensation and (in the case of pension liberation) extra taxation.

IFAs reserve a special place in hell for regulators who blame IFAs for FCA deficiencies and there they are very angry that they are being blamed for the latest massive swindle, the London Capital &Finance Mini-bonds that are currently under investigation. These investments weren’t sold by IFAs but by sophisticated marketing techniques which by-passed the advisory process. Effectively regulatory loop-holes were exploited.

IFAs will pay; they will pay through reputational damage and they will be forced to pay higher PI premims and higher levies to sort this mess out.

And we know of several other such products which have been flagged by Angie Brooks and others, which no-one is doing anything about – despite their being the product of managers who’ve a track record of destroying investor value. Here she is on Blackmore, last month, within days Blackmore was closed.

Angie points out , what Paul Lewis has pointed out, that advisers have been trying to stop the sale of these minibonds. Now it is the FCA themselves who stand in the dock

 


A negative spiral that helps no-one

This is the context of IFA concerns with the FCA, they see a lack of resource, accountability and plain common sense in the FCA’s dealings and especially in the FCA’s treatment of whistleblowers and are in no mood to be lectured at by Debbie Gupta.

This kind of lecture makes things worse not better. It creates a breakdown in trust which will lead to less rather than more whistleblowing. In such a climate the cheats can only prosper more.


A better way

A much better tactic for the FCA would be to promote the best practice that is going on within the advisory community. Al Rush continues to restore confidence in the system in Wales and elsewhere, Darren Cooke’s cold-calling ban is now in effect, DB transfers are down and contingent charging is on the way out. This is because of the impact of IFAs as much as the heavy hand of the FCA. The important thing is that jointly both advisers and regulators are changing things.

The Regulator has accepted that mistakes were made at Port Talbot and will no doubt have to hold up their hands on London Capital and many more like them.

But Port Talbot shows that when the FCA start working with the good IFAs , good comes of it. The same with cold-calling and I am sure that if the FCA listened to Angie, we could rid the world of the scourge of offshore bonds peddled by the international arms of OMI, Generali and others.

We all want to rebuild confidence, that’s what this blog’s about. I worked with Debbie Gupta when she was at NEST and had some tough conversations. I know that she is a strong and principled woman.

My advice to her and the FCA is to find the advisers who are doing the whistleblowing and help them. This is a better strategy than demanding advisers move en masse to whistleblow.  Advisers do not feel that whistle blowing to the FCA works and the FCA can find out why by talking to Al Rush, Angie Brookes, Darren Cook , Al Cunningham and the many other Chive advisers who are keen to see standards raised.

The spirit of collaboration will win, confrontation won’t.

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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