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Percival: Financial advice not yet a profession and why FCA will be conducting fewer visits  

Rory Percival, technical specialist at the FCA, has said that, personally speaking, he does not think financial advice could say it is recognised as a profession

Speaking at the Paraplanners’ Powwow, Percival stressed that this was his personal opinion when he said: “I think you’re not a profession unless you’re recognised as a profession and I don’t think the adviser community is quite there yet. And a profession improves itself. It doesn’t look for someone externally, like a regulator, to tell [it] how to do things to improve standards.”

Percival praised the paraplanner community for demonstrating professionalism in the way that paraplanners seek to share good practice ideas, technical information and generally help their peers, outside of any competitive interests. He said: “The paraplanner community demonstrates good practice in the way it tries to find better ways to do things and I applaud you in that area.”

On the theme of professionalism, Percival posed three questions to the audience, which he had put out  on Twitter and he wanted the advisory market as whole to contemplate.

1. How would you describe professionalism? Percival said he had already had a number of answers via Twitter with two general themes on what professionalism is: Knowledge, skills and competence; and integrity and ethics.

2. What is it to be a professional firm? This, he pointed out, should be more than that the firm is staffed by professional people. For this question Percival said he had received fewer responses.

3. What is it that demonstrates a profession? It was here that Percival said he did not think that financial advice was yet recognised as a profession.

Percival said the three question he had asked formed part of the FCA’s revised strategy which would see it reduce individual visits to adviser firms and focus more on its communication with the market so that going forward the regulator could better ascertain what the issues are for the adviser firms.

Firms can expect fewer FCA visits

Percival explained that the FCA is going through a transitional period in which it is seeking to make better use of the “limited resources” of the FCA Retail Investments division. Currently that is 35 supervisors out of the FCA’s total staff count of circa 3,000 people. With 6,000 firms to regulate the number of visits would be reducing, he said.

From now on, Percival said, in the supervision of advisers, platforms and SIPP operators by the FCA “there will be a greater focus on the thematic work we undertake”. Structurally this will see the current three teams in the division split into four, with two of the new teams focused on thematic work. He cited the review of centralised investment propositions (CIPs) and the current review of due diligence as examples.

The greater concentration on communication he said would help firms to better understand what the regulator actually does expect and also debunk the myths that have grown up around what is expected. “I think in practice, a lot of what we expect firms to do is a lot simpler than is portrayed.”

As a result, he added, individual firms will probably see less of the FCA “except in the thematic scenarios” but the idea is for the FCA to attend more industry events in order to get its messages across to the market. It will also be looking at different ways to communicate, for example through greater use of videos and potentially podcasts. He stressed: “We’re interested in what will work for you – so if you have ideas please let us know. We can have a view on a sector but we would like to know what your issues in the sector are.”

To facilitate this, the regulator has set up a dedicated email address:

Percival added: “Just to manage expectations, you won’t get an answer if you email us – it’s there to help us get an idea of the issues and how we might deal with them.”

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