Merryn Somerset-Webb

They made me sit an exam on giving financial advice. And I’m glad

The old British tradition of unqualified advisers is one we should be happy is gone

[Getty Images/Shutterstock/iStock/Alamy]

There was a time, not that long ago, when financial advisers as we know them today didn’t really exist. Pension and tax advice came from accountants. If you bought shares you bought them via a stockbroker (who gave you advice along the way). Unit trusts came directly — you responded to advertisements or perhaps got your accountant to do it for you. Occasionally you used an insurance broker. And that was that. It wasn’t particularly complicated and as a result no one (your accountant aside) was officially qualified to do anything. Brokers and dealers didn’t take exams to prove their proficiency and no one really thought they should. In the June 1963 edition of the Stock Exchange Journal, a Mr H.H. West in a marvellous piece on the idea of compulsory qualifications stated that ‘if it could be proven beyond all reasonable doubt that the introduction of examinations would be in the interests of everybody concerned and the practical and administrative difficulties could be overcome’ then no obstacles should be put in its way. He was not convinced that this was the case. His final conclusion? Introducing exams would be no more than a ‘public relations gimmick’.

Not everyone agreed — in the US, professional standards of various sorts had been introduced at all stock exchanges; the Scottish Stock Exchange was thinking about doing the same; and it would be a pity, said the (now defunct) magazine The Statist, if ‘London were to let progress pass it by.’

But London did. In the US the SEC went on a regulation bender. In the UK nothing much happened. By 1964 Ken Hart of stockbrokers Barden, Hart and Blake was lamenting, again in The Statist, that there was ‘no professional body to which a man can turn for investment advice’.

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