As the FOFA implementation date approaches, advice practices will need to make the transition from legislation-led behaviour to self-regulation, BT head of advice Mark Spiers told InvestorDaily.
“Our leadership on FOFA is one of the main reasons practices are attracted to us. But beyond FOFA, the focus needs to become about self-regulation coming into the mix,” he said.
“At the moment, the industry is being led by regulation with the FOFA and [Tax Agents Services Act] changes, but it will be self-regulation that will be the important defining moment for the industry,” he added.
While Mr Spiers praised the role of legislative change in fostering greater professionalism in the financial advice space, he said leadership must ultimately come from licensees and practice principals.
This leadership must involve mechanisms for self-reporting and performance analysis, including dealing with transgressions, he said.
Starting with the original due diligence process when making a determination about whether a practice should join the network, licensees must foster a culture of “quality without compromise”, he said, suggesting that testing internal controls and complaint resolution systems is essential.
Where wrongdoing is discovered, Mr Spiers said licensees have a responsibility to then decide whether the behaviour requires a punitive or remedial response, and have a fair process in place to implement that response.
“These are not invasive measures,” Mr Spiers said. “They are the measures of a professional organisation.”
Having a process in place to self-report and self-regulate is not a hindrance to advisers within the network but is a drawcard, indicating that the licensee values quality and advocacy.
“We think our process and our focus on weeding out these issues has been a competitive advantage for us,” he said.
