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Named and shamed

Regulatory comment for financial advisers

5 Aug 2013

Listening to recent reports, we hear that unless surgeons and consultants make public the ‘death rate’ results of their labours, they will be named and shamed.

This seems to be a developing trend in the UK these days, a modern day version of ‘tar and feathering’ or ‘branding’ by way of a letter to indicate the crime committed.

Society in the UK has fallen into a pit of self-righteous indignation where unintentional failure is now seen as a consumer crime, a detriment punishable by a compensatory and humiliation action. Strangely, those championing such a course of action see that it should apply to everyone else except those who do the ‘naming and shaming’.

How very strange.

No longer do we live in a world of ‘shite sometimes happens’. In our industry, every failure, underperformance or mistake is looked at as a compensation opportunity and if the miscreant does not prostrate themselves at the altar of the consumer or regulator, they can expect the worst.

Who actually decides who should be named and shamed? Is it governments, politicians, civil servants, regulators, after all, often no law has been broken and it is historically frequently the case that this cross section of society is more responsible than anyone else for failure?

Well in ‘Regulation Street” it is the FCA and the FOS who do the N&S-ing that is now being seen, linked with big fines, as the preferred method of getting firms to comply and some may see no issue with that.

The FCA hit the deck running on April 1st kicking off its reign by publishing the latest “most-complained” list of financial firms for the second half of 2012.

We should not be too surprised that the top 5 are all banks- Barclays comes top of the ‘naughty step’ with 414,302 complaints in the second half of 2012, Lloyds, Bank of Scotland, MNBA, Santander follow behind.

I cannot see any signs of heads hung in shame as a result, can you? 

In some extreme cases of ‘N&S-ing’ it seems very appropriate but with large institutions what is the point? Some Barclays shareholders may be concerned as may some customers but will it stop them investing in them or banking with them?  

But if, as a society, we are travelling on a name and shame roadway those “casting the first stone” should not be exempt.

If ‘N&S-ing’ is to work it should be fair in who is “N&S’d’ and I suspect that many advisers would see that the 'namers' should also be shamed where appropriate.

For example, you may have seen this headline recently Complaints Commissioner rebukes FSA for withholding information”. The FCA responded (as the rebadged FSA) to the findings by saying “We agree that total transparency is necessary to ensure the objectives of the scheme are met.”

So that’s it then, no naming, no shaming, just move on?

This is not the first time that a regulator has fallen short of delivering the standards it expects of firms. Tony Holland, the Complaints Commissioner and former PIA Ombudsman observed when finding the FSA was 'unprofessional' and 'lacked integrity' in March this year that “ “References have been made to principle 11 which states a firm must deal with its regulator in an open and co-operative way. In my view although this applies to regulated firms it must equally apply to the FSA.” 

We hope that the staff involved have at least been reprimanded although I suspect nothing will have happened, not even a day of ‘integrity’ training.

But, N&S-ing the N&S-ers does not seem too welcome as that would imply responsibility. The FSA was not keen on that at all, the FOS works on “Merricks Law” (as in they make it) and governments, local authorites and politicians get very tetchy if on the ‘N&S’ radar.

Politicians are possibly amongst the worst offenders, often setting the precedent of do what I say, not what I do, that others then blindly follow. Any sense of shame seems to have been surgically removed upon their taking up office. 

I think pretty much all adviser businesses make great efforts to do the best they can for their customers, in financial services they pay dearly for that privilege.

Let’s cut those very good adviser firms some slack FCA, be more open and set the bar for high standards, not find ways to duck under it with impunity.



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Comments (1)

Either I’m muddled or you are. As I understand this article on the one hand you seem to think that publishing death rate results is not a good idea – I couldn’t disagree more. Those of us fortunate enough to afford private medical insurance choose our practitioners by reputation and results. Those who use the NHS have to put up with what they are given. As taxpayers pay these people’s wages surely it is right that they know who is inept and who is skilful?

As to complaints in our field. I also think it is worth naming and shaming. But as you rightly say the shaming is not robust enough. The likes of Barclays (for example) should be made to suffer the conswquences much more. What about prohibiting them from transacting business in those areas which attract most complaints and only allow them to resume after a thorough investigation and audit by an independent outsider (paid for by the Bank) before they can continue?
As to the point you make about politicians, regulators and Quangos escaping - here I couldn’t agree more. Thanks to the Daily Telegraph the venality of our Parliamentarians was laid bare – but have they changed their ways? To the contrary – they get a pay rise as a reward. Hundreds were listed as fiddling – just a handful did porridge.
If you are saying that if we are to have transparency then it should be transparency for all – then I’m right with you on that. It’s just that it didn’t come across very clearly. Perhaps I’m a bit thick.

Harry Katz   07/08/2013   09:06


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