“If lawyers are disbarred and clergymen are defrocked, shouldn’t it follow that cowboys should be deranged?”The world for financial advisers and their clients has changed drastically over the last 10 years. Ten years ago in the United Kingdom, the newly formed Personal Investment Authority, which then became the Financial Services Authority, introduced minimum standards for people working in financial services.
Among those affected were “tied” agents _ those who worked for an insurance/investment company or bank and also for independent individuals, and who could offer any products from any investment company. They had to pass the Financial Planning Certificate as a minimum requirement or be proven to be working toward attaining this within a certain timeframe, with the sting being that for anyone offering financial advice in the UK without licence and regulation, this would be a criminal offence. These types of strict regulations are now gaining ground throughout the world.
The result was that as many as 65% of “financial advisers” in the UK at the time disappeared as people who were unable or unwilling to take the necessary professional qualifications dropped by the wayside, making room for a new breed of adviser dedicated to a professional career.
Additionally, alongside the required qualification was the requirement for ongoing training, so that industry professionals kept their knowledge current. The concept of “polarisation” was introduced. Advisers were either “tied” to one company, were representatives of that company and could only offer its products or they were “independent” and represented the client in finding a suitable product. In theory, if the tied agent did not have a suitable investment product that matched the client’s criteria, he or she was supposed to send the client to an independent. This did not always happen as products were sometimes “bent” to fit.
Sadly, some of those who exited the business were long-term professionals approaching retirement age, who did not want the hassle of new exams even though their experience was wide-ranging and the advice they offered was first-class.
With the industry in the UK tightened, regulations and methodology were introduced to ensure that at all times the client received the best advice. Everyone’s circumstances are different and individual financial planning should reflect this.
Lagging behind, but rapidly catching up, is the offshore market. Notable is the European Savings Directive, which places the emphasis firmly on financial institutions to ensure that the independents offering their products are suitably qualified, licensed and regulated. Worldwide anti-money laundering regulations now require that advisers adhere to an ever-increasing set of rules to ensure that clients are who they say they are, live where they say they live and that the money is coming from a legal and verifiable source.
While the additional paperwork and responsibility sometimes frustrate clients _ for example those who work in off-the-beaten-track places, such as oil exploration sites, returning to “civilisation” every three months or so _ it is there to make money laundering and its results such as 9/11 and the recent London bombings that much more difficult.
This affects the offshore market since most of the best financial institutions have bases in the strictest jurisdictions such as the Isle of Man and the Channel Islands _ and these adhere to the European directives and anti-money laundering regulations. For the jurisdictions that are not so strict to be able to continue business, they will also have to adhere eventually to similar worldwide regulations.
For the benefit of clients in countries that do not require or insist on licensed, regulated advisers, there is OFTA – The Offshore Financial Trade Association. This is a London-based, global offshore regulator whose ombudsman is the former independent investigator to the UK Financial Services Authority. It can arbitrate in any dispute over advice given to clients by advisers who are members of OFTA.
The open range of the unlicensed, unregulated offshore world for the unqualified, unregulated financial adviser is rapidly shrinking. But the parallel result is also that it is also becoming that much more difficult for clients with sums of money that have been “lost” off the taxman’s radar, to invest it properly offshore.
And this is where a properly regulated, qualified professional financial adviser _ in conjunction with properly qualified, professional lawyers and accountants _ can greatly assist in keeping your hard-earned cash legally out of the taxman’s pocket and in your or your family’s coffers.
By John Shaw
Questions to the author can be directed to Barclay Carrigan International quoting reference JS 07, on 02-653-1971 or e-mail to info@barclaycarrigan.com or visit www.BarclayCarrington.com
Source: Bangkok Post
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