Breakdown in FSA communication could be to blame

25 January 2010

I was interested to read last week the story about the fine and ban of Bolton-based mortgage broker Riaz Ahmad.

Ahmad failed to cope with the regulations such as not having suitable systems in place. But according to the Financial Services Authority he was the only person able to give advice or present business. So who would enforce compliance? And who would be supervising whom? (I can feel a Monty Python sketch coming on.)

There is no indication in what the FSA said that any client money was put at risk or that bad advice was given.

So the crime apparently was not doing anything wrong, but failing to do the required paperwork. For that one can lose one’s livelihood, which to my mind appears excessive.

I would add one further, rather sensitive, comment. A significant number of these cases appear to involve members of what I can only call minority communities. I accept that my analysis is based on a broad assumption, namely that of the style of name, but one day I noted that 50% of the people disciplined were from minority communities. Since these communities are less than 20% of the total population, a 50% content is excessive.

So we have to consider what that may mean. Are minority communities deviant or do some have problems understanding and dealing with our rather bureaucratic approach?

Remember that the FSA comprises middle class white civil servants answerable to no one, and from what has been indicated in many reports they are not particularly understanding or sympathetic. So is the problem genuine deviancy by the minority communities or a serious breakdown in communication?

Remember that most of the white middle class constituents of the IFA profession find a lot of the FSA’s requirements fairly meaningless - though being British we abide by them.

Reading a number of the FSA’s pronouncements I have been struck by an innate sense of righteousness in its statements, rather than a serious wrongdoing on the part of the culprit.

Nobody wants fraudsters as IFAs, but the question no one is asking is are we getting rid of the relatively honest as well?

In which case, a possible conclusion is that we will be so focussed by fear on complying with the regulations that we have little time and energy for quality advice.

This is a discussion that is taking place on the web between the cognoscenti - shouldn’t it be aired in public also?

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