Financial advisers need to be part of the solution, not the problem

The Financial Conduct Authority's review into financial advisers makes for pretty grim reading. Some 15 months after new rules were introduced to help clean up the IFA market, the FCA has shown that the job's not yet half done.

It's an incredible disappointment - and one hell of a missed opportunity for an industry that provides the key to rebuilding trust in financial services companies.

After a run of financial services scandals over the past two decades - from endowment mortgages, to PPI to the banking crisis - public trust in our banks and insurers is shot. But people will always need bank accounts and insurance - and in a market where trust in the providers is rock bottom, the role of the adviser becomes even more important. By guiding customers to the best products, and rewarding those companies that play fair, IFAs have the opportunity to be the catalyst towards a fairer market across financial services.

Instead, too many IFAs have been wrapped up in the same short-termism that has been responsible for much of the poor practice amongst the providers. 

When the regulator introduced the Retail Distribution Review at the end of 2012, it gave IFAs the chance to draw a line under the past and start afresh. A more transparent, more robust approach to financial advice would build faith amongst their clients and eventually amongst the wider industry.

But today's announcement by the FCA reveals that very few advisers rose to this challenge.

I don't want to tarnish the whole industry with the same brush. There were many excellent, honest IFAs before the introduction of the RDR, and there are no doubt more since it has been introduced. But too many continue to bring down the reputation of the whole sector by failing to raise their game as the new rules require.

It's laudible that the FCA has not let this issue drift. Since the new rules came into force, it has been constantly reviewing the sector, and has now called it out twice in nine months. It's clear that there's nowhere to hide. If IFAs plan to stay in business, they need to realise that they need to be part of the solution, not part of the problem.