Good regulation will benefit the industry by strengthening consumer confidence and creating a prosperous marketplace, says the CII's Sandy Scott
The financial services industry, taken as a whole, has never been fully at ease with the concept of regulation. Neither has it pursued, as assiduously as it might, demonstrable levels of professional competence.
This is not to say, of course, that it has been universally lax with regard to standards. The industry has simply preferred a more informal approach than is generally favoured by regulators and champions of consumer interests.
What is incontrovertible, however, is that the industry will change. Regulation is becoming more intense and omnipresent, and, quite rightly, the consumer lobby grows ever more muscular and influential.
We as an industry will only progress if we recognise this and respond positively. If we prove reluctant to work with the regulator, if we fail to align ourselves with consumers, we will suffer.
That said, we should remember that no broker, adviser or company employee has anything to fear if he or she adheres to core professional tenets. These are the pursuit of management and technical competence and commitment to the highest ethical standards. In other words, if you know your stuff, respect your clients and operate with integrity, then regulation will prove no inconvenience to you.
Indeed, effective regulation is the professional's ally since it strengthens consumer confidence and creates an active, confident marketplace. Companies operating to the highest levels of management and technical excellence can only prosper in such an environment. In other words, a well-regulated, well-managed and thoroughly capable industry will serve its customers properly and allow companies and individuals working within it to flourish.
Qualifications remain the bedrock of this scenario. Examinations such as those offered by the CII provide an objective, measurable way to raise and maintain standards and underpin competence. But they are not a panacea. Qualifications only contribute to enhanced performance if they are located within the business environment that boasts appropriate management controls, rigorous yet sensitive regulation and professional and technical capability.
The coming months hold the promise of further developments. We will soon be discussing reports from Pickering, Tiner and Sandler. We have continuing unease about pensions and with-profits policies. In 2004, we will see the General Insurance Standards Council (GISC) fully absorbed into the Financial Services Authority (FSA), further solidifying the core regulatory edifice.
It is worth repeating, however, that qualified professionals should welcome and promote regulation and the pursuit of competence. We have nothing to fear but fear itself.
