Trust in the UK Financial Services Sector
Trust within financial services is at an all time low. The industry is portrayed in the media of one that cannot be trusted. But, following the recession, issues have arisen surrounding trust. Consumers are often stuck in the middle and left in the dark about the services that they seek. While the market is said to operate on a basis of honesty and integrity, many feel that this is not the case within the UK’s financial sector.
Financial Misconduct in the UK
This is not to say that all financial providers are the same. There are many sincere and honest companies that strive to meet the needs of their customers. They adhere to the principles of the FCA. But, it seems that the actions of the few are reflecting negatively on the smaller independent businesses. Since the recession, the bigger financial service companies have been investigated more closely. Some have mishandled money and investments. Others have been party to huge bonuses. This goes against the principles of the FCA. Clients, ultimately need to come before profits.
Unfortunately, the actions of these few have tarnished the reputation of financial service companies that are keen to do things in the right way. It is essential that all financial services organisations are following the rules and pulling in the same direction. This approach is critical for many customers that have lost their faith in the banking system. The ramifications can be felt within the entire industry.
Customers’ Expectations of Financial Lenders
What customers want to see more of are lenders that are responsible. Customers also want to see lenders that are putting the customer at the heart of their business. Only then will trust be placed within the banking system again.
In most cases, where companies breaking the rules have come to light, it seems that the brand takes the hit. However, in most cases, it is a group of people or one person that is normally at fault when things go south at an organisation.
In a rare turn of events, the FSA moved to ban one individual from the money market altogether.
Personal accountability is vital in the sector. One case in point is that of Tony Verrier.
Tony Verrier quit his role at Tullett Prebon and was set to join the broker’s competitor BGC Partners. However, issues arose when it was discovered he was breaking FSA guidelines and breaching contracts.
Western Circle is a lending institution providing short term credit in the UK under various trading names. As a company practicing the FCA’s strict regulations, we continue to learn from past cases of misconduct in the UK. This article will look at the Tony Verrier case in more detail.
The Case of Tony Verrier May 2012
Unlike other cases that the FSA involved itself in at the time, the FSA based its decision on a High Court decision. This is quite an unusual circumstance. In most circumstances, the FSA dealt with its cases in organisations, departments and individuals themselves. This is done without the involvement of the courts.
The case embroiled both Tony Verriers current and former employers; BGC Partners and Tullett Prebon. Tony Verrier’s previous employers, Tullett Prebon, alleged that he wanted to lure some of his best former people at Tullett Prebon to join him at BGC Partners. During his time at Tullett Prebon, it was stated that Tony Verrier had misplaced or lost a number of Blackberry devices.
The ruling, made by the High Court judge in March 2010, was striking and damaging enough to ensure that no further case was to be made by the FSA at the time. The case showed that Tony Verrier was not a fit and proper person due to concerns over his honesty, integrity and reputation.
Industry and Individual Failings
Although Tony Verrier was the individual who was at fault in the way he conducted himself at Tullett Prebon, he was not aided by current employers BGC Partners. BGC Partners were aware of his recruitment drive to bring across his former colleagues from Tullett Prebon. Their short-sighted approach to recruiting both Tony Verrier and his former colleagues was inappropriate. Tony Verrier also had an approach that did not favour himself and his former employer Tullett Prebon. Tony Verrier looked for ways he could have been constructively dismissed during his time. He even advised BGC Partners that that was the scenario he was working through.
It seems that the failings have come from both Tony Verrier and BGC Partners at a time when the industry is trying to recover from the worst financial crisis in recent years.
The FCA and the Approved Persons Process
The FSA already have a framework in place to ensure that the people who work within the financial services sector are approved. This seal of approval demonstrates that the people involved in financial services act with honesty and integrity.
This Approved Persons Process is to ensure that customer faith can be placed within individuals and organisations. Where trust is at an all-time low, it is important that this faith and loyalty from customers is returned to business and individuals alike.
In a statement, released at the time, the FSA stated that it had decided to impose a lifetime ban on ban Tony Verrier. This meant that he could not perform within financial services. As such, he cannot undertake work that is regulated by the FCA.
The FCA state that honesty and integrity is a must. Without this, the financial service sector is set to fail. Customers need to be safeguarded against unscrupulous tactics. They need to have their needs met over bottom lines and profit. Customers of financial products should be treated fairly so that they have trust in the fragile sector.
Preventative Action and the FCA
The FCA still run through the Approved Persons process. But, it seems that much more can be done to stop individuals abusing the system. This abuse only goes to damage financial services of all shapes and sizes even more.
In order to ensure that the financial services are as transparent as possible, the FCA needs to do more to work with individuals working within financial services. More training could be provided to those entering the profession. Ongoing professional development could also be beneficial to those already working within the sector. This would uphold the principles of honesty and integrity more robustly.
For individuals that break the law in this way, more severe punishments could be on the cards to deter individuals from this damaging practice. The punishments should not only be limited to the individual, but the business needs to be accountable too. Only then, will a culture of dishonesty be eradicated from the sector.
The FCA needs to do more to ensure companies and individuals are held accountable for their actions. A tougher approach will see more faith being placed in the financial services sector.