So, you’re a stockbroker, and you’ve been in the game now for over a decade. You’ve got some fairly serious book-learning under your belt, and have experience across a wide range of businesses including buy and sell-side analysis, sales-trading and futures trading. You’ve been at your current desk for 7 years, and you guided your clients through the crash with some success.
However there was a crash. And lots of people lost money and are looking for someone to blame. The economy is stagnant (though this is mainly due to pre-crunch crowding-out coming home to roost). Everyone in the financial services industry without a regional accent and a job in a call-centre, is a “banker”, and so “a cause of the crisis”.
“Something must be done“, said the politicians, without having the vaguest notion of what it was they wanted to achieve. So they asked the FSA to “do something”. So the drones of the FSA, who regulated the banks so successfully over the past decade, asked the Professional bodies like the ‘Chartered Institute of Investment Management’ and the like, whether further regulation of the investment advice industry was needed.
“YES!” screamed the professional bodies. “All brokers need to be a member of Professional bodies [us]” they said with a straight face, “and they must all take lots of Exams [provided by us, for which we will charge many hundreds, knowing these people have no choice but to take them or lose their jobs]”
“Anything else?” Asked the failed banker with a 2:2 in media relations from Hull, who was rejected by the investment banks he really wanted to work for, instead of the FSA.
“Certainly. the brokers need to spend many hours logging their ‘continuous professional development’ on our system, so we can sign off their competence each year, by issuing an annual piece of paper called a ‘Statement of Professional Standing‘, but only if they take lots of courses [provided by us, for which we will overcharge]”.
“That seems a lot of work” said the FSA-wallah, overcome with sympathy for the non-problematic part of the financial-services industry which forms his bailiwick “won’t that take them a lot of time they could spend blogging tending to their client’s needs?“
“No” lied the professional bodies. “This will improve the customer experience. All exams are good [even though we’re STILL teaching them the CAPM which is, put simply, bollocks]”.
The FSA-wallah reports back to the politicians that the regulation of investment advice is in hand. “This is something“, say the politicians. “Let’s do it“.
Thus financial regulation gets more onerous, time-consuming and expensive. Clients will see higher bills, and find it harder to speak to their broker as he will be doing his mandatory 35 hours of logged annual CPD or inputting it into his chosen Professional body’s computer system. It not being worthwhile to go through the process above for small clients, if you want advice, you’d better have serious wedge to invest, or you’re on your own.
If you want a perfect example of regulatory capture working against the interests of (especially less-wealthy people), this is it.
The Retail Distribution Review is the most counter-productive piece of legislation I’ve ever seen. It’s a Vicious, savage, bureaucratic, insane, corrupt over-reaction to a problem which doesn’t exist. It will virtually ban those on average earnings from receiving decent financial advice. They will be driven instead into the arms of the Banks who will sell them “products” whose performance is utterly opaque, larded with fees which will be virtually impossible to get out of. The banks will call this “advice”, but you will never see or hear from the hair-gel and bri-nylon school-leaver who sold you the “product”, ever again.
You think the Banks fear tighter regulation? No. They want it. They lobbied for it. They NEED it. Regulation protects them from the likes of me. Wicked.