Working the network way
It can be less the case of do you want to use a network and more do you need to use a network, says David Carrington, marketing director Personal Touch Financial Services.
The debate about whether to be directly authorised (DA) or authorised through a network goes back over 20 years, although the key argument in favour of DA status still seems to be: “I don’t want any network telling me how to run my business.”
Taken at face value there seems to be some logic to this statement but let’s look through what emotionally might appear a strong motivation and explore an alternative possibility – perhaps the desire should actually be: “ I really need a network telling me how to run my business.”
Virtually all of the prescriptive behaviour and requirements coming out of our business are designed to ensure our members continuously comply with FCA rules and guidance and that the consumer always gets a good outcome. The advice process and subsequent outcomes are ultimately our legal responsibility and this ensures we have a huge incentive to keep all our members trading compliantly.
How a business owner or principal markets their business; what areas they specialise in, what type of clients they hope to attract, how many advisers they need or even how often they play golf or go skiing are all questions for the principal to address. Certainly in the case of our network and hopefully in the sensible majority, in all of these areas and beyond we would most definitely not interfere and allow the principal freedom of choice within the bounds of any legal or regulatory relevant restrictions.
I’ll do it my way
So just what does “I want to run my business my way” really mean? As a starting point I suspect it is not a desire that the FCA would fully concur with. Any regulated business needs to run its operations in a compliant manner and it seems to me that network membership is a practicable way of providing yourself and your clients with the reassurance that you are doing so. Obviously the network route is not the only way as many successful directly authorised firms have shown but just what should you expect if you do try working the network way?
Taking a simple example, a network might challenge a piece of advice given by an adviser member who forgot to include all their documentation on file. It feels like a pain at the time but ensures that not only is the outcome right for consumers but importantly that you can prove it at a later date. Where is the equivalent of this in the DA space? Some firms outsource to compliance specialists who may look on a random case level, albeit for a fee and others may have in-house facilities but with overhead costs many more would find obstructive. The crucial element here is that what might be a minor oversight by an adviser working under pressure could well flare into a major issue when you can’t deliver proof of a good advice process to the regulator, grumpy client or claims management company at some stage in the future.
One of the aspects which takes many of the firms who move from network to DA by complete surprise is the amount of form filling, reading and process management that has been done. In contrast, hidden away in most networks are specialist policy teams that read every FCA message, interpret them all and then turn them into simple relevant straightforward guidance for members. A similar scenario exists with financial promotions’ sign off process; again it may be frustrating to have to submit your great marketing ideas to another team before going live but surely that has to be preferable to the FCA spotting the one tweet you post that is non compliant?
Network members are insulated from a huge amount of form filling and compulsory returns. The Retail Mediation Activities Return (RMAR) is complex, ambiguous, intimidating, arduous and worst of all has to be completed at least twice a year. A good network’s finance team should complete all of this activity on their members behalf without them really seeing the end result – until they consider how much more time they can spend looking after clients. Sometimes it is the simplest things that put the bigger picture into context.
For more information on Personal Touch go to: http://www.personaltouchfs.com