Why SimplyBiz's chair thinks the FCA is bringing consultation into disrepute

18 Nov 2016

SimplyBiz chairman Ken Davy realised early in his financial services career that a clear and honest approach with clients would pay off. So in his first week at Abbey Life in 1970 he decided all his clients would know what they had bought, why they had bought it, what it cost and who they were buying it from.

“These four principles are the ones I’ve lived through and always used; they have helped me to be successful,” he says.

Perhaps it is a testament to those principles that two former clients Davy met recently still have the products he sold to them in 1971.

“I haven’t been involved in advice for donkey’s years and these were people I didn’t know at the time; we weren’t friends. One is still contributing to the plan and the other has still got it building up. The one still contributing has paid in a total of about £2,500 and its value is now about £26,000. That’s the magic of saving,” he says.

Davy’s preference for the long game rather than short-term gain is also evident in his support for Brexit.

“For me, it’s not about short-term economic issues and whether we make an extra few shillings in the next year or two. It’s about what kind of a nation we pass on to our grandchildren for them to pass on to their grandchildren. Most of the industry had a different view because of short-termism. We will have a difficult couple of years but we shall be in a much stronger position out of Europe,” he says.

What does worry Davy is how the FCA is “trying to be an economic regulator”. He says: “It’s trying to micro-manage firms, which is wrong in principle and in practice. It should focus on a clear framework and objectives, and let firms get on with it.

“We’ve had 50 or 60 consultation papers this year. SimplyBiz has four people reading and responding to these consultations but the average small firm has no chance. The FCA is bringing consultation into disrepute as consultations are only meaningful if people have a chance to read them and respond. If they can’t respond, there’s no consultation.”

That said, Davy does believe today’s financial services industry is more professional than it was 30 or 40 years ago, with advisers better trained and businesses better run.

“When I joined Abbey Life I wasn’t impressed by some of the individuals in the way they approached what they were doing. They saw it as a way of making money. To me, good financial planning – helping people protect their family and save for the future – is a social service. Yes, you make a living as well but it is about helping people. That is why I am so passionate; it’s almost a calling.”

We have four people reading and responding to consultations but the average small firm has no chance 

Photographs and PI pains

You get the feeling Davy does nothing half-hearted. It is all or nothing. Take his previous career in photography. He went around the world 13 times in four years as a cruise photographer from the age of 19, then started his own photography business in Huddersfield.

As the first person in the world to print a colour photograph through a commercial print process, he says he was able to offer services others could not compete with. But by 1970 he had a young family and was also pursuing an interest in local politics so he needed a career which offered more flexibility. Financial services fitted the bill.

“I locked the camera up in a cupboard as I was a well known photographer and if I’d walked around with a camera people would have seen me as selling life insurance on the side. The camera never saw the light of day,” he says.

Davy’s career post-Abbey Life is well documented. He initially worked as an IFA then invented the IFA network with the launch of DBS. DBS was sold to Misys in 2001 and, by 2002, Davy had launched a new company, compliance and business support services firm SimplyBiz.

But it has not been plain sailing. Almost immediately after SimplyBiz launched, the professional indemnity market for small firms disappeared.

“At the outset of 2003 the PI insurance market had collapsed and the regulator at the time, the FSA, had no solution. At one point, over 1,000 firms regulated by the FSA were trading without PII because it was not available. The underwriters wouldn’t pick up a pen for less than a £25,000 premium so it was cost prohibitive for smaller firms – that’s if they could get it. It would have shut down SimplyBiz before it started or made life impossible for the IFA sector. It would have been the end of the IFA sector,” says Davy.

“So I spent six months figuring out a solution and found one. I was working with the FSA and to a certain extent the Treasury in putting an approved solution together. The first three were rejected but the fourth was a breakthrough. It involved establishing a re-insurer with SimplyBiz initially taking 95 per cent of the risk.”

SimplyBiz now helps over 6,000 advisers and has recently launched a digital solution. The web-based NextGen Sites service enables advisers to provide their clients with topical information and interactive tools. This ties in with Davy’s views on robo-advice.

“Robo-advice is a contradiction in terms: it is not robotic and it is not advice. However, using enhanced technology and what is termed robo-advice is a fantastic opportunity for advisers themselves. Used properly it will help advisers service more clients more efficiently and more profitably.”

Davy plans to continue ensuring the firms SimplyBiz serves remain competitive and successful.

“We are still growing every month and the basic premise hasn’t changed. It isn’t that a firm couldn’t spend time doing its own compliance if it wanted to, but it can spend its time more productively doing other things,” he says.

It seems Davy, who is also chairman of Rugby League club Huddersfield Giants, rarely gets interviewed without speculation about his retirement. Does he get fed up with that particular line of questioning?

“I don’t know whether Mary Berry has this problem, and she has quite a few years on me,” he jokes. “But I’ve not thought about retirement. As long as I enjoy what I do and I’m learning something. I do other things as well, I’m not a workaholic.”

Five questions

What’s the best bit of advice you’ve received in your career?
To make the complex simple for clients. It’s not about telling them how clever you are but about what you can do for them.

What keeps you awake at night?
Nothing really – but I have to say, this season, the Huddersfield Giants!

What has had the most significant impact on financial advice in the last year?
Pension freedoms.

If I was in charge of the FCA for a day I would…
Set in train the elimination of all the rules concerned with micro-managing the firms that are regulated and set down a practical framework.

Any advice for new advisers?
Put the client first and meet as many new people as you can.

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