Just as the FSA expect firms to do their own due diligence on providers, they have now written to CEOs to confirm that although they vet ‘approved persons’ the regulated firms must do this too! Talk about a duplication of effort… also, with their statutory powers, how must easier is it for the FSA to do the diligence. The thorny matter of references makes it really hard for firms to investigate new members of staff, what is needed is a neutral party to make enquiries. The FSA could actually earn their fees by allowing their vetting to replace firms own. Now that would be useful. It would also be useful if FSA authorisation and regulation gave some guarantee of ’soundness’. It’s classic hot potato stuff, nobody wants to own the liabilities do they?

Brokers & adviser firms: if you could deal with CPD, T&C , improve the performance of your staff for free would you? Insurance and financial services apprenticeships can do just that! Minimal time expended, lots of FSA addressed and definite improvements in staff knowledge and performance. This is TCF too! 

To find out more e-mail Karen@thegiconsutlant.com

The FSA has had to tap into £200m worth of credit facilities with LloydsTSB and HSBC to cover a funding deficit for 2008/09. This is the first time the FSA has made use of the £100m credit agreement it has with LloydsTSB which was set up before the credit crunch. The regulator has also secured an extra line of credit for £100m from HSBC. Reports suggest that the FSA has already agreed a further loan from Lloyds to finance its expected deficit for the forthcoming year.

If the ‘who is paying for this’ question is not scary enough, what about the conflict of interest here? The regulator is dependent upon loans from those it is regulating. Humm!

With profits funds such as endowments are now subject to new rules, belatedly. The long and short of it is that firms cannot now pay compensation for mis-selling etc. out of the fund. The obvious inequity of doing this or even thinking of doing it makes me wonder why, with all the rules and regulations, it could possibly have been allowed!

Many endowments were on track right up to the last year or two, then suddenly they get a ‘red light’ at a time when it is virtually impossible to do anything about it unless you have a large wedge of good money to go after the bad!

This is far more scandalous than the origional mis-selling, which was  just a part of the times, a way of getting a mortgage that you would not otherwise have been able to afford. Endowments were practically a fashion.

Why didn’t the FSA say that firms should focus on getting their ‘with profits’ profitable instead of effectively ensuring that no new money went in and as many as possible got out?

Grrrrr….

A big part of the problem with regulation in financial services is the constant changing. The regime has changed so often that nothing ever beds in. Even having the FSA as a constant since 2000, they keep changing things as well. Whilst we should be open minded about change, it seems that nothing is improving, it’s just getting more and more complicated and I fear that eventually everything will seize up. Already we see that the new Sale and Rent Back regime has pushed the majority of players out of the market place leaving distressed homeowners with even fewer options that they had before.

Strikingly, there are so many similarities between the old IBRC and ABI rules and the principles outlined by the FSA and yet we were not confused by the former, they worked and they would fit in a small folder; thus there was every chance that we could all read and learn them. Now it’s impossible to know where to start with the regulators rule  book. The legislators have mentioned before that there might be too much red tape, so what do they do? They make more of it. It’s enough to make you want to become an MP!

So now, when the government changes, millions more is to be spent unravelling the FSA. It is likely that the new consumer regulator will actually be the old one with a new remit. Prepare to rewind.

Playing a diffferent kind of rugby – league instead of union – was a bit like going from GISC to FSA. All the old rules that have been drummed in have to be forgotten. It must be harder going the other way, looking at a player such as Andy Farrell, I can now see how he struggled as an England centre. There has to be a technique for adapting methodology and skills. Brokers need to take the time to grasp the new rules and relate them to the old ones. Bagging a new risk at the eleventh hour and worrying about the paperwork later used to be a cause for congratulation, now it make you a compliance pariah! Of course, I am the person to coach this…

 Many employers are concerned that their staff are spending all day on Facebook et al. Looking back to a pre-internet age, I would say that things were always thus. 

Back in the early 80’s when my mortgage outstripped my take home pay and overtime was essential somehow I managed to have some fun… mainly in the office as I virtually lived there. 

First of all I was in charge of erecting the Christmas tree, traditionally the job of the newest member of staff which was me for a few years as the recession bit. 

However, my main memories of that time were of having to make it fun; office cricket for example: the ball, a screwed up piece of paper, the bat, a file and the stumps, someone’s IN/OUT trays. Hit the window for a six, the wall for a four, the fielders were also manning the phones. Runs could be tricky. The service was much better than a call centre. Then there were those days tied to the old banger IBM terminals where we sent raunchy internal messages and drank Lambrusco out of plastic cups. This ended with a missive from ‘Head Office’ saying that internal messages were clogging up systems and all had to be downloaded and printed!  Someone will have had some fun! Now we have e-mail jokes instead. Head Office was there as an object of hate and ridicule to keep us all united and the training centre was the place to party – 50 or so trainee underwriters, two pubs, nothing on TV, what did they expect. Flexi-time meant we could flexibly be in the pub, fitting our hours around opening times – yes, remember them! People were often ‘sick; on their birthdays, not stay at home sick though, if you see what I mean. 

So, if you want them all doing ‘CPD’ in their lunch hours, why not make it fun. TCC have a great ‘TCF’ game. Anyone not understanding CPD and TCF, don’t worry about it unless you are in insurance or financial services, in which case, please call me immediately! More information on TCC making TCF fun then e-mail Karen@thegiconsultant.com

Having been involved with FSA firms for several years, I have seen the odd balance sheet crisis where accountants have written things down and make tax efficient moves that have dented a firm’s capital resource. So a perfectly solvent brokerage falls below the minimum threshold conditions.

Now brokerages – financial advisers too – are businesses that generally either don’t hold client assets or they keep them separately (safely),  they are not known for failing and if they do fail they don’t cause that much damage to anyone else.

The West Bromwich building society is the latest financial institution to be reported as struggling. The rumours of problems pervade all of retail banking. One minute though mutual building societies were fine – their rules did suggest that they would not lend out more than they took in as deposits. Sadly the rules didn’t preclude them from investing in dodgy debt it seems.

As we have seen, failure of such firms causes detriment across our society and affects us all badly. Tax payer money is at risk.

Why do small adviser firms have to have these disporportionate balance sheet requirements (the FSA want to double the requirement for small IFAs to £20,000) when large firms and those that keep peoples money, have a major influence on the health of our economy and are responsible for many jobs manage to get away with balance sheets that are precarious to say the least!

It is clear that the FSA can easily regulate small firms and impose rules including capital adequacy, however, it is blatantly not possible to enforce and monitor such rules for larger more complex operations. If a small mutual building society cannot be sorted out, what chance have they with gargantuan banking institutions? Small is not only beautiful, it’s manageable, allows choice and spreads risk.

A question that arises following my experiences in Greece! I was able to take out a mortgage without one single warning about re-possession, life assurance with no disclosure warning, key features or even a policy and paid fees that were not debited until three months later for something described succinctly in a couple of Greek words. Add to that I get no bank statements and to find out how much was in my account I had to go to Greece, from Leeds! Happily I was able to get a ‘log on’ to internet banking while I was there. Armed with about 18 forms of identification I went into the bank; they set me up and did not even ask to see my passport. Thus I wasted hundreds of pounds and three days as I could have just sent anyone! I do not see the Greeks having a ‘Treating Customers Fairly’ policy, plan, gap analysis and management information stash!

So, we blame the EU for FSA regulation, are we sure? Greece is in the EU.