30th August 2011

Dignity in Regulation Policy now needed?

Should what’s ‘Good for the Goose’ as the proverb goes, be ‘Good for the Gander’?

There are views held by some within the industry that the FSA may appear to treat its staff differently to those it regulates. The FSA according to it’s staff handbook, “is committed to creating a working environment where employees feel valued and respected, which is free from harassment or bullying and where everyone is treated with dignity”.

The handbook also makes it clear that “harassment and bullying can have serious and significant consequences for everyone. Employees may become unhappy and less motivated, even getting stressed and ill… leading to higher turnover and in some cases to legal dispute”.

The FSA is not tolerant of harassment and bullying in the workplace, any “employees found guilty of bullying or harassment will be subject to the FSA's disciplinary procedures”.

With this ‘excellent’ framework in place I am starting to get a bit worried about how the FSA’s “Dignity at Work Policy” migrates to those it regulates. After all the FSA clearly states it is a socially responsible employer, committed to making a “positive impact on the local community that supports us”.

Headlines such as “Firms secure compensation after FSA blunders” highlight very well the concerns of firms.

So, who or what is the ‘local community’, do they mean - those they regulate?

Now please do not get me wrong, regulation is vital in so many areas of society today and the Financial Services industry as a whole is very much in the consumer sights as being a fair target and sadly for very many good reasons. Thankfully IFAs are in a significant minority when blame is being dished out. But surely those that are regulated should be entitled to feel “valued and respected” by a regulator and “free from harassment” too, especially if they have a demonstrably unimpeached track record.

The IFA community could be forgiven for thinking that the whole regulatory process is designed to see the demise of the small IFA business in particular by simply making life difficult where it need not be. They may have a point. Regulation as it is being ‘meted out’ today does not sit comfortably with the Regulators Code that the FSA should, we believe, adhere to.

For the smaller IFA firms, does the FSA and will the FCA:

• Act as an enabler to economic activity.
• Consider the impact that their regulatory interventions may have on economic progress, including the costs, effectiveness and perceptions of fairness of regulation.
• Will they/ have they ensure/d that any decision to depart from any provision of the Code is properly reasoned and based on material evidence.
• Adopt a particular approach if the benefits justify the costs and it entails the minimum burden compatible with achieving their objectives.
• Seek to reward good levels of compliance by way of lighter inspections and reporting requirements where risk assessment justifies this.

In particular, they should also “take account of the circumstances of small businesses, including any difficulties they may have in achieving compliance”, yet this may not always be the reality.

IFA businesses have for decades been predominately made up of small businesses yet the application of regulation would appear in the eyes of those it regulates to be a ‘one size fits all’ process with business owners feeling that they do not take account at all of the circumstances of small businesses, including any difficulties they may have in achieving compliance.

Never in the field of regulation has so much money been spent by so few at the expense of so many, to fix what may not be entirely broken had the regulator been more intent on watching what it did not, in pursuit of what it did.

The lesson learned is, don’t learn the lesson, just carry on regardless of wise and reasoned opinions stacked against you because you can!

With all that in mind, perhaps we should also consider that oh so PC correct policy of ‘Diversity’, and I do not meant the street dance group.

The FSA Diversity policy states that “We are fully committed to eliminating unlawful and unfair discrimination, and we value the differences that a diverse workforce brings to the organisation.

The FSA, according to the staff handbook “does not discriminate and prohibits discrimination because of race, disability, gender, gender reassignment, pregnancy and maternity, religion or belief, marriage or civil partnership, sexual orientation or age or any other unlawful reason”.

But I think it misses the bar with those it regulates. Many well qualified, industry legal eagles would suggest that the FSA is possibly acting unlawfully in various ways, empowering the likes of the FOS and ignoring various laws and human rights issues. But then it can it believes, because FSMA 2000 allows it to.

In short, the FSA may strive to create “a meritocratic environment where contribution, openness, and fairness are valued”, but not in the eyes of many IFAs I suspect.

FSA/FCA, Panacea Comment