A Question of Trust 

For the past six months, we have been working extremely hard to support one of our Member Firms in recruiting a new Financial Planner who is, in our opinion, competent, personable, and extremely focused on client service and outcomes.  In a previous role, he blotted his copybook procedurally, and it cost him his job.  Mind you, when you know the (national) intermediary firm concerned, everything makes perfect sense.

The FCA's approach in these 'non-standard' cases is to defer making any kind of decision, through the device of throwing up an apparently never-ending sequence of obstacles.  Just when you think you've dealt with everything they have asked for, after another prolonged spell of inactivity, back they come with another batch of requirements.  If you were an Olympic hurdler, you might be forgiven for getting a little tetchy if, everytime you had the finishing line in your sights, someone laid down another batch of hurdles.  Of course, the problem with that analogy is that we are not in a position to know where that finishing line is, in such 'non-standard' cases, which presumably empowers the FCA in playing this particular game.  Either way, on the receiving end it is neither humane nor professional.

The experience does, however, highlight the nature of trust.  It is on this issue that the whole focus of compliance and regulation appears to lose its way, and ends up treating people as if they are merely the levers or cogs within a huge machine that churns out results.

On what basis do we establish trust, within our professional relationships?  In a case such as this, where some kind of personal failure is uncovered, on what kind of basis do we determine that they deserve a 'second chance', or is a promising career to be blighted forever, due to an ambiguous set of circumstances where assigning personal responsibility may actually be quite difficult?  Is the new social reality that we should we be driven towards a position of absolute, unwavering skepticism towards everyone that we meet?  After all, this candidate's failure was discovered, and therefore became known to his previous firm - but how many mistakes, errors of judgement or poor ethical choices might lie there in everyone's life, but never see the light of day?  There is a kind of inverted moral hypocrisy at the heart of an approach which seeks to define a person's value and qualities by reference to a single issue or event and (apparently) chooses to ignore such things as client endorsements, and the kinds of assessment that we might make during the interview process.

The FCA appear to want some kind of categorical, empirical answer to questions raised by some past event where a person may, admittedly, have let him or herself down, yet all of us have over the years encountered instances of egregious behaviour amongst regulated financial advisers, that continue happily in business without any apparent indication of concerns by the Regulator.  These are often the people who earn the big bucks, who skip from one national firm to the next, before their past catches up with them - if the FCA is seeking to establish some kind of failsafe in order to exclude the 'wrong people' from the activity of intermediation, then the merits of its approach are not exactly self-evident.

Of course, I might be quite wrong.  And that, realistically, is the possibility that I have to hold in my mind.  As I look at a potential candidate, with some kind of 'issue' in their past, I do fully accept that the act of building trust between people is a subjective matter, a 'soft skill'.  I would guess that I am no different from anyone else in my ability to objectively assess a person's truthfulness, integrity and preparedness to engage with the ethical and professional standards that ValidPath have put in place.  It is conceivable that there is some weakness at the heart of a willingness to give someone the benefit of the doubt.  But at some point, I have to take something on trust if there is to be some kind of ongoing, fruitful relationship, as it is not possible to define a human being by means of a sixty-point compliance checklist.  Can I categorically demonstrate to the FCA that 'it' won't happen again?  No, of course not.  On the balance of probability, it is unlikely that it will though - we may get given a second chance, but there won't be many third, fourth, fifth chances there for us.

But equally well, can the candidate trust me?  Now, there's the rub.
 

Related Resources for ValidPath Members

There's a useful page on recruitment in our Supervision & Support area.
Kevin Moss, 22/05/2015