Like tax, regulation is a fact of life for any adviser now in almost every country around the world (OK apart from you guys in the Middle East). It was that those operating in some of the world’s less developed economies could escape the more stringent regulations imposed in the developed world. This is no longer true.
However, what is also true is that, more often than not, when a developing country does decide to introduce regulation, those subject to it nearly always believe the powers that be “have got it wrong”.
I was speaking to the chief executive of an IFA recruitment company today, which specialises in matching talented individuals with opportunities overseas, and he suggested one of the main reasons for this is that the industry being regulated, in the case of offshore advice/products, is hard to pin down. Quicksilver comes to mind.
A regulator is trying to oversee the behaviour of foreign nationals, selling products not domiciled in their country, to people who are more than likely also foreign.
The tendency for regulators to “get it wrong” can also be compounded by a desire to be the “best”, or at least most professional, from the start.
This means, in contrast to somewhere like the UK, which has had years to develop and refine, advisers and providers must almost overnight re-shape their business models, achieve new qualifications and adjust to a new regulatory climate. While it is hard to argue increased regulation is a bad thing, moving too quickly can not only damage the advisers and providers, but the clients too.
So, what is to be done?
While this is clearly not a new idea, I am interested to know (please use the comment box below), whether there would be any scope for a consortium of advisers (maybe providers too?) which all have an interest in ensuring that new regulations, while still achieving their aim of protecting investors, are more suitably aligned to the needs of an increasingly professional industry.
I’m sure that as countries develop and attract advisers from overseas, they would be appreciative of at least some steer from those closest to the providers and clients on what would be a suitable level of regulation to aim for.
I am not suggesting leaning on regulators for the gain of the advice profession – that clearly wouldn’t work and is not what is needed – rather a “company neutral” point of contact for regulators worldwide to engage with what is a growing international financial community.
Let us know what you think using the comment box below or get in touch with me via twitter at @SimonDanaher1
