“I find it a shame that customers can be persuaded to buy something by someone who is unregulated – it seems to be a bit of a get-out clause There is a moral component. We’re not selling jeans, after all.”
Darius McDermott, managing director at FundCalibre, says mitigating potential conflicts of interest within his business, especially given his ‘second hat’ worn at Chelsea Financial Services, is essential.
Gill Hutchison, research director at The Adviser Centre, agrees, who, alongside chief investment officer Peter Toogood, reminds us that in a “cottage” industry such as theirs, there is an additional element of personal brand management involved otherwise the FCA would “be assuming that none of us has any integrity”.
McDermott says the quantitative aspect of FundCalibre’s ratings service – required funds to deliver consistent alpha generation – sits front and centre, reducing any potential for conflict.
Geoff Mills, director at RSMR, is relaxed about the whole thing. While not a regulated entity, RSMR operates as though it were taking a professional, moral stance.
“Our role is not one that is regulated but we operate as though we are a regulated entity. We all come from regulated backgrounds. We know what one does to be fair in how we deal with people in a professional way. That might sound like I’m on a bit of high moral ground, but it’s true.”
At Square Mile Investment Consulting and Research, managing director Richard Romer-Lee takes the same stance. While half his business – the model portfolio service – operates as a regulated entity, and half – the fund research and consulting – does not, the team applies the FCA conduct of business rules across the whole business.
“Because it is the right thing to do, and we can’t run a business with a dual culture,” he adds. “We need to make sure there is regulation in the chain.”
So while the writing may not quite be on the wall yet, given the watchdog’s apparent oversight regarding some of the sector’s key influencers, it wouldn’t surprise me at all if hands get forced somewhere down the line.
