How much is that website in the window, the one with the bright shiny logo

 

Andrew Power, partner at Deloitte, was recently on record as saying that increasing regulation and its associated cost will certainly exacerbate the trend that sees advisers dealing with wealthier and wealthier clients as they need a certain weight of assets to get an income flow”. He is also of the view that “there may also be a back-lash against regulation”.

The Financial Conduct Authority (FCA) recently told advisers in the A13 fee block (which covers most adviser firms) that they face an increase in fees for 2013/14 from £32.8m to £37.9m.

We also heard that firms regulated by the FCA would plug the Financial Services Authority (FSA)’s £107m pension deficit under the new regulatory structure.

Concern continues to mount regarding the costs of regulation upon adviser firms, most of whom are small businesses. As an industry, we are told that every effort is being made to ensure that regulatory costs are contained, that ideally budgets will be carefully considered, and that the FCA will exercise care in how it spends the money placed at its disposal by the firms it is empowered to regulate.

So, on seeing the new logo role out on the 1st April, it crossed my mind that perhaps the date was an omen for what is to come, an ‘April Fool’ but one that costs a lot.

To test that theory, we made a Freedom of Information request to the FCA asking:

“I would be most grateful if you can confirm the costs incurred to create and establish the brand identity of the FCA up to its April launch.

This should ideally relate to the creative, design and production costs. In particular we would request details of the cost of the logo design, the website design and build, the rulebook and all stationary costs to facilitate the creation and launch of the FCA in April.”

To put some contextual flesh on the bone, in the view of some well-placed industry experts, “the functionality of the FCA website seems fairly basic”. It is pretty much a re-skin of the FSA site, the rulebook has rolled over too. Some editing would be required, for example changing references from the FSA to the FCA, something that is a simple ‘Word’ function in many ways but on a large scale.

The staffing of the FCA is mostly a transfer from the FSA, the address is the same.

I am very pleased to report that the request was dealt with promptly, politely and we have now received the reply that we are sure will be of interest to the industry as a whole and small adviser firms in particular.

As a new regulatory organisation, the FCA states that it “needs to ensure that consumers, firms, markets and its staff understand its objectives as well as perceive the FCA as a new regulatory body. To this effect, we have developed a new brand identity to reflect our new objectives and how we will engage with consumers and firms differently”. The resulting logo design is clear and simple.

But should the exercise cost £1,061,423 including VAT? At nearly 3% of the 2013/14 adviser fee pot, is this money well spent?

The cost of the logo design:

“We have spent £48,000 on designing the FCA brand identity, £91,500 on developing the FCA brand guidelines, £57,000 on registering the new logo and on legal fees to resolve registration issues”. 

The website design and build:

“The cost of the new FCA website, which included its design, build, architecture, code and content changes was £723,576.81”.

The rulebook:

“We have interpreted ‘rulebook’ as the FCA’s ‘Handbook’.  The total expenditure for this work which involved the design, legal fees, development and build of the new site was £101,000”.

All Stationery costs:

“We spent £40,347.68 on the design and production of business cards, note pads and pens. It is worth noting that stocks of FSA stationery were monitored and run down and replenished with new FCA’s stationery in the lead up to 1 April to minimise costs”.

A spokesperson for the FCA commented: “Several agencies submitted quotes for the work on both the brand identity and website design and in both instances we chose the agency who offered the best value for money. All this was delivered on time and on budget.”

As Mandy Rice Davies said they “would say that wouldn’t they”?

One agency, GASP, did exactly that and said “I find a figure in excess of £700k outrageous. You can achieve a lot with that type of digital spend…the cynic in me has a good idea what has happened here.”

Marketing Director of Panacea Adviser, Sarah Paul, who has over 15 years experience working within e-business and marketing functions for several major financial services firms commented, “For a website with no apparent tools or interactivity, I find it incredible that over £700,000 would be spent on a basic rebrand”.

Simon Ryan of Social Advisers, who has considerable experience at corporate level working on rebranding projects, said “For the extent of the changes that were required for a simple refresh from the FSA to the FCA and looking at what they have delivered, I’m not convinced the FCA will be able to claim they have received value for money. The website costs would raise alarm bells for me”.

The news of this spend comes in the same month that David Geale, the FCA’s head of investment policy commented that “Forcing platforms to justify charges will reduce costs”.

He said “We are concerned that the current way that platforms are funded is opaque and makes it difficult for customers to understand how much they are paying for the platform service or to compare platforms”.

Well, Mr. Geale, I think the industry is having difficulty understanding how much they are paying to be regulated – both in the past by the FSA and now the FCA.

In the world of regulation, a spend of £1.06m is not a lot of money – yet that is precisely the problem. The old adage about the pennies looking after themselves could not be directed at a more deserving target. After all, if this figure can be spent and is, for example, 30% more than it need be, the big question posed is where else too much money is being paid.

Perhaps the Treasury Select Committee (TSC), who has been advised of this spend, should conduct an enquiry into the regulator’s processes regarding infrastructure spending and ensuring value for money by way of quality at the very best price.

The time has come to stop the seemingly profligate spending of other people’s money, consumers’ money, in fact, as they are ultimately the ones who end up paying.

Or, is it the case that as now it is only the wealthy who have easy access to paid-for financial advice, that who pays the piper and how the piper acts really does not matter?

What do you think? Add your comment here.

Compliance speed check, are you up to it?

Regulatory development has been increasing momentum in recent years and it is often difficult for Advisers and other firms to keep fully up to speed with everything thathas changed. MiFID originally brought in a raft of changes in 2007 and even today there are firms that have not embraced those rules. More recent changes have increased the regulatory load of firms and if you slip behind it can take huge effort and cost to catch up or bring things up-to-date. With the change of the regulator to one that has announced increased interventions, it is vital that advisers are aware of what is required and take the steps to implement it.

It is for this reason that Panacea has teamed up with CEI Compliance, the financial services regulatory risk, compliance and strategic consultancy.

Compliance service providers are varied in both cost and methodology, with the big-four heavily involved in the larger organisations.  However, CEI Compliance provides bespoke solutions on a just-in-time basis, using specialists with both experience and qualifications.

CEI Compliance is also a highly skilled in understanding Social Media Compliance. Therefore, following Panacea Adviser’s recent launch of Social Stream, which allows advisers to engage with and educate their customers through social media channels, we are delighted to offer you a free ebook which has been produced in conjunction with CEI Compliance entitled “How To Use Social Media In Financial Services”.

Many advisers are apprehensive about entering the social space due to regulatory concerns and this guide has been specifically designed to address these issues.

This online handbook provides information on how to take advantage of social media whilst remaining compliant with new and emerging regulation and also explains how firms can develop robust corporate policy mandates surrounding social media.

Click here for more information and to download the ebook.

Additionally, CEI Compliance offers advisers a range of services for Smaller Adviser firms, providing a remote regulatory enquiry service; Compliance Health-check, Regulatory Visit Preparation, Complaints Handling, Regulatory Intervention Management, File Audits and even a whole company Customer Journey Assessment to identify the level of areas where TCF is being applied.

Launch Offer

As a special offer to mark the launch of the CEI Compliance and Panacea Adviser collaboration, we are pleased to announce we have a SPECIAL OFFER for a limited time only.

Smaller Adviser firms can get a 10% discount on the normal fee charged. 

PLUS as a member of the CEI email service, if you commit to a year’s service, after 3 months CEI Compliance will send you their fully editable Compliance Manual of over 80 pages for free.

And for Consultancy work CEI Compliance are offering a £1,000 discount off fees for work of 10 working days or longer (or 20% off any consultancy work for less than 10 days).

A clear and present danger, but for who and in what form?

When I was a kid (very many years ago, but yes I was a kid once) the 1950’s was a very different world to the one we see today. As was the sixties in my teen years – I must have been there too as I “cannot remember it” as the saying goes!

We had lead pipes, asbestos lined buildings, no central heating, single glazing and our milk and coal was delivered by a horse drawn cart. We had schools you would walk or cycle to – on your own, mothers were almost always married and at home looking after their children. Fathers went to work to support the family.

Toilets were mostly outside the house and froze in winter, toilet paper was very hard, ambulances, police cars and fire engines all had bells and one blue light.

Streetlights did not light up the night sky and in some places were still gas powered. Bombsites from the war were everywhere in Essex and London, we played outside, football boots came above your ankles with leather nailed studs and were made (not kept) soft with dubbin. The ball we played with could cause brain damage it was so hard and heavy.

Knees, elbows, heads and hands frequently bled from falling over or fighting and Manchester United played in a ‘grey and white’ strip.

We played outside, un-abducted, un-assaulted, and un-afraid. We knew not to talk to strangers, play on railway lines or with unexploded bombs, not to vandalise property, to respect your ‘elders’, teachers and the police. We actually knew who our father was too.

We could, very importantly, add, subtract, multiply and divide and knew how to work out change in pre-decimal, pounds, shillings and pence Britain.

We could, also very importantly, read, write, express ourselves when asked to, we could eat with a knife and fork, sit at a table until given permission to leave, knew when to say please and thank-you. We could use a toilet, clean our teeth, wash our hands, and be at school on time in our clean school uniforms. Our caps had peaks facing to the front and our homework was done (in my case often with much parental…… shall we say ‘encouragement’!).

The ‘Labour Exchange’ dealt with the ‘unemployed’ and not ‘job seekers’ or ‘clients’. Hospitals had a casualty department, not a ‘triage unit’, which quickly helped those with serious injury and not a ‘nosebleed’.

The police were respected because they were actually walking the streets, they did do something in the unlikely event that you got assaulted or robbed and you could go out and leave your doors and windows open.

Hospitals did not kill you with lethal bugs as they were actually cleaned and managed properly The National Health service got you better. It did not consider it part of the service to remove tattoos or deal with making breasts bigger, smaller, sex changes or penis enlargements on grounds of increasing self-esteem.

‘Vulnerable consumers’ were around then too, but were mostly made up of those who were in fact a business danger to avoid as mostly they were feckless, would not or could not pay.

The heart of 50’s financial services was the City, men wore three piece suits and bowler hats to go to work, women if they were unmarried and without children were secretaries (or as Al Murray would have it ‘nurses’) something that seems simply unimaginable today, and financial markets were driven by a code of “my word is my bond”.

Banks looked after your money, building societies would help you save and give you a mortgage to buy your home if the branch manager felt you were likely to pay it back. Workers had final salary pensions and jobs for life as long as they did not punch or kill their work colleagues.

If you actually had some money to invest, that found it’s way to a stockbroker who really did understand it was your money not his.

Solicitors had clients and dealt with ‘matters’, insurance companies had policyholders and their agents personally looked after their long term insurance and savings needs weekly and banks had customers who deposited money and wrote out cheques to pay bills. Petrol was less than 5/- or 25p a gallon in today’s money!

I could go on, but I think you get the drift by now?

That was austerity, even though Harold Macmillan did reckon we had “never had it so good”.

‘Regulations’ was a word that applied to the military and the railways. ‘Regulators’ were something to control gas or water flow.

So what kind of world have we created today in what is considered to be an advanced and hi-tech nation, and is it working?

Well, on planet “Financial Services UK” it is not.

It is now a complicated, highly regulated, automated, risk averse, all blame, all claim, sometime cynical and very expensive place to live and work.

The gainers now all work in regulation or offshoots of it, not in entrepreneurial business creation.

Losers, who pay for the gainers cosseted lifestyles are the many small regulated businesses and of course eventually the ‘consumer’ (previously known as clients, customers and policyholders) to whom the cost is passed on.

Command and control is still located in the “Dark Star” at Canary Wharf. It is a parallel universe that previously and possibly still will, with a ‘new crew’, reflect the agendas of the unaccountable being imposed upon the accountable.

And their mission is to boldly remove from the ‘consumer’ all danger, menace and potential for loss ensuring positive ‘outcomes’ (a word that now replaces results) for all.

Very laudable, but this is the same universe that sees the exact opposite being applied everywhere else in the society of second millennium. Morality has plumbed new depths, men often being seen as reckless fathers, rapists and perverts, women seen as objects of abuse. Respect and consideration for others has all but disappeared. The laws, rules and rights in society are no longer fit for purpose.

The public perception of the financial services industry today, partly of it’s own making and very partly due to failed regulators and regulation over many years, is seen as a version of mafia run Las Vegas in the fifties and while all this is going on we see a nanny state hell bent on creating rules and laws that are mostly unenforceable or go unenforced.

Today, financial services is being subjected to the genetic re-modeling of its DNA to remove forever the gene thus ensuring consumers may never lose out- ever, irrespective of merits.

The ‘outcomes’, that fantastic new word describing something previously known as ‘results’, are already being seen.

Mark Garnier is already urging the TSC to conduct a review of the RDR due to the mass-market reduction in easy access to financial advice, especially in light of RDR enforced adviser remodeling and bank withdrawals from the advice sector.

Financial services businesses are there to help their clients and in providing a great service they rightly should prosper and most importantly make a profit.

A financial services business, any business in fact, should treat its customers well, if not what is the point of being in business?

But businesses, financial or otherwise are not a social service. It is a fact of life that sometimes “shite happens’. The world we live in contains ‘Baldrick’s” as well as “Abramovich’s’ and reality is that no matter how hard you try you cannot remove risk from life and you cannot always protect people from themselves.

As an industry we must accept that despite all best intentions, ‘knees’ get cut and occasionally people suffer terrible injuries or worse.

But these do not always happen with intent, they are frequently an accident and in today’s ‘regulated’ world an accident means that somebody else pays for their lack of attention, consideration and careless or reckless actions. Anybody that is except the ‘consumer’ and of course the regulator who was supposedly on guard.

Are we better off as a result of past regulation, Possibly not, I think most regulated industries are now in failure disarray because of, or maybe in spite of, regulation – this never happened in the 50’s.

Financial services regulators should wake up and smell the commercial coffee.

If we carry on the way we are there will be no financial services industry left and no incentive to innovate, enter it or develop new products. It will be destroyed by a sterilizing regulatory radiation cloud emanating from Canary Wharf and not Brussels, as David Cameron would suggest.

Firms should value, cherish and appreciate the wealth and success a well-run business with happy clients can bring.

Regulators should concentrate on those that do not and learn to recognise that blame should sometimes sit at their door, or that of the “consumer”.

The person next to me smells

The power of the consumer to distribute the experience after a face to face financial interview or an online journey has never been greater.

An ever increasing number of people will share experiences, positive or negative and instead of talking to their friend at the bus stop, or in the pub with a few mates, these experiences can now be sent round the world via a devastatingly powerful interconnected human network.

Business can be shattered or enjoy fantastic reviews in an instant via a vast connection of social consumerism. People in the UK are happier to share experiences via an online medium because of the ‘veil of secrecy’ that social feedback systems offer them. People will happily facebook or tweet that the ‘person sitting next to them smells’, but would not engage in conversation with that person, and point out that there is a raspberry and kiwi shower gel in Boots that has a Trust Pilot review of 4.6 out of 5.

Through social media and online feedback systems, individuals are motivated to share everyreaction, and Zuckerberg’s law suggests that the number of social objects we share online willdouble every year. The world has changed and people now expect information to come to them and be available in a personalised format. Context is paramount in the business of engagement and the consumer is now in control of how relevant context moves in their direction and influences their next steps.

Facebook and Google are engaging in a battle for market share and supremacy of the online media space. A very similar battle for supremacy ensued in the 90’s between Halifax and Abbey, theylocked horns for a ding dong battle for the greatest percentage market share of the intermediary mortgage business. This battle had the result of giving all of our clients access to excellent interest rates and services. That is, until Abbey had a few difficulties with admin, and we all went to Halifax. It is unlikely there will be an outright winner between Facebook and Google just shifting controls through innovation.

News now finds us, with special offers and deals sent directly to our phones, iPads and laptops all consumers need to do is unlock and activate. Sending these offers and connecting with the consumer is not limited to the comparison sites, however they are the best at it. They leave the banks and insurance companies stuck at first base. However, it is not just attracting the consumer to your site there is the ‘decision making cycle’!

There are considerations that need to be looked at for any online strategy, with the ‘decision making cycle’ divided into 4 key stages.

  1. Formulation: The moment or instance that triggers interest and the steps a consumer takes to reduce the initial options.

  2. Pre-Commerce: Based on the initial consideration, the consumer conducts open research to validate the initial choices.

  3. Commerce: When the decision making process is concluded the consumer journey is only just the beginning. Touch points unlock to shape and steer the ensuing customer experience.

  4. Post- Commerce: Following the purchase, consumers bond with the product, but to what extent defines their loyalty and advocacy. 

Knowing the consumer and understanding their decision-making and experience-sharing behaviour, is instrumental in developing on target engagement and marketing strategies.

It is the consumer that ultimately defines the success of the brand, product or service with a motivation to share every reaction. The difference now is that the consumer is making the world a much smaller place, they may not say directly that the ‘person next to them smells’ but you can guarantee that information is being shared and then shared again, by an interlocking social network.

 

James Sadler
Independent B2C Consultant 

James Sadler works as an independent Online Consultant helping Financial Services Business maximise sales through an Online strategy.