I recently attended a series of meetings and forums within the UK and listened to various voices from within the industry patting themselves on the back as to how they treat customers fairly (TCF) as if this was a relatively new phenomenon, there was admirable great emphasis on governance, compliance and transparency.
It all starts to get a little thin when after some self-congratulation I had to listen to some criticism of not only what are seemingly perceived weaker provisions contained with in both MiFID II and its sibling IMD II and of course the wider world getting a typical English sniff.
I was brave enough at one encounter to remind these new templers of the finance industry that the current environment was in no way a product of industry largesse or a broader road to Damascus moment but forced upon them by considered lawmakers and delivered by robust regulatory provision. I reminded some of those present that during the period of RDR public consultation, extreme pressure was put on the then current regulators to abandon the whole thing. Without a robust regularity environment in the UK these commercial gatherings would be singing a different tune.
To be clear nothing is perfect and sadly money still talks whether the PRA or the FCA will admit it or not there is still an amount of cosying up to the mega financial corporations at the expense of the SME’s and the occasional big fine does not excuse what would cause the smaller players to have the fine but also lose their trading licences. It will be interesting to see how the criminal charges being brought against Barclays Bank PLC pan out. Trading is unlikely to cease. Let’s not forget who the regulators bosses really are…. the BAE systems whitewash is as interesting case in point. Whilst big fines give regulators good political sound bites its small bear in the real world.
For all companies wherever they are based, the local regulatory environment of course underpins the operational activity of what a company must do to be compliant etc., but as ever what really matters is the core culture at the heart of any organisation, it is there will be found the true nature of TCF balanced with all the needs of the other stakeholders. The playing field is relatively level, the key drivers come from a range of levers, innovative developments, a balanced holistic approach to all the key areas that make up the mechanics of a company, there a lot of examples to describe these levers, but right at the top is culture, that will drive everything in the end.
Culture is moulded by strong Boards, committed CEOs and cascaded on down through and organisation and it’s the nature of that culture that will drive success or failure in relations to treating customers fairly, not the regulators. There is a delusion amongst lawmakers and down through the departments that enforce those laws that culture can be influenced by them, there seems to be scant evidence to prove this case especially in the field of financial services. The onus is on us in the commercial world to deliver and ensure that all stakeholders are treated fairly.
Peter Hobbs is chairman of deVere Group