So it turns out that habitual fare dodging, and then allegedly failing to disclose the offence from your employer, does not make you a fit and proper person in the eyes of our regulator.
As a result of ‘saving’ nearly £43,000 in rail fares over several years through the exploitation of a loophole with his Oyster card, a former managing director at a fund management group has been banned by the FCA from taking any responsible role in the financial services sector in the future.
It’s another bit of bad news that we can pile on the heap of things which reduce trust between consumers and all of us in financial services.
When the FCA published their post-implementation review of the Retail Distribution Review this morning, I genuinely believed for a moment that we could see some positive headlines in the press.
If you read through the post-implementation review, it’s obvious (to me, at least) that the positives far outweigh the negatives. Even the FCA used the headline ‘Early indications that reforms of financial advice are working’.
And these are only early indications. Keep in mind that the RDR was introduced on 31st December 2012. We’re rapidly approaching the second anniversary of that introduction; two years in a typically slow-moving financial services sector is not that long.
Read through the FCA press release and some great results leap off the page.
There are indications the sector has responded positively to the reforms. There’s been a reduction in product bias, because commission is no longer a driving factor in advisers’ recommendations. An increasing number of financial advisers are gaining further qualifications, demonstrating growing professionalism in the sector.
Even that oft repeated myth about the ‘advice gap’ was partially debunked with news that there is little evidence that the availability of advice has reduced significantly.
Yes, this is undoubtedly a good news story, regardless of whether you originally agreed with the purpose of the Retail Distribution Review or not.
So why did the trade press run with headlines including ‘RDR has pushed up the cost of advice’ and ‘FCA refers one firm to enforcement in post-RDR review’?
Why did they choose headlines such as ‘RDR review fails to find evidence of consumer benefit’ and ‘RDR review: product bias down but trust in advice still low’.
One trade publisher, which I can usually count on to sensationalise their headlines, surprised me with ‘RDR is working, FCA declares’. But other than that, it’s generally negative headlines out there, business as usual for the financial services trade press I guess.
I’m starting to wonder whether these trade publishers are doing us a disservice. Could consumer trust in advice perhaps be improved if these publishers were more balanced in their reporting, occasionally favouring the positive findings of such stories?
It would have been great to read headlines based on the good news in this research. Where was ‘FCA: Growing professionalism in the sector’ or ‘Financial sector responds positively to reforms’?
I get why the trade press write stories and associated headlines as they do.
Bad news dominates headlines because we have a collective hunger to hear and remember bad news. This is the so-called negativity bias which psychologists explain help us avoid danger.
Human nature means we respond faster to negative words. Editors and journalists know this, and write accordingly.
But I contend that time-pressed financial professionals often don’t read beyond the headlines.
If they do read the entire story, they don’t often read the source material. Their opinions are instead formed by the headline, some key quotes in the story and perhaps the first anonymous comment below the story itself.
So when the FCA finds reforms of financial advice are working, instead we are left with the impression that firms are failing to embrace professionalism, being referred to regulatory enforcement as a result and once again losing consumer trust.
Perhaps as we become more educated in our consumption of all media, we might change our habits and actively search out the most accurate reporting of stories.
We naturally gravitate towards news sources with similar political and editorial leanings to our own which, given the readership of the Mail Online, makes me fear for the future of British society.
Perhaps voting with our eyeballs and only reading those trade publications which give the right amount of credence to the positive side of retail financial service is the way forward.