Often the most nerve-wracking time for employees in any working year is when they receive their annual appraisal. That is unless you have been a model employee, hitting all targets and generally performing at the top of your class. Then there will be little for you to worry about except the negotiations over your pay increase.
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However, if you feel that your performance hasn’t been up to scratch for whatever reason – perhaps this was a new role and it took time to find your feet or you may have missed a couple of targets – then you will probably be anticipating your review with all the relish of an hour spent in the boardroom with Sir Alan Sugar.
That said annual reviews are important for both employee and employer. Reviews can be as much about the employee appraising the performance of their manager as opposed to the other way round. They should be a two-way communication, highlighting positives and negatives with feedback freely flowing and key actions produced at the end.
Individuals and firms
It occurs to me that if employers simply asked their employees to produce their own annual appraisal they would be slightly less useful. This would be one person’s take on their performance over the year and most people, when having to justify themselves, would try not to focus on the negative. Having said this, it is interesting to see how an individual or firm views itself and its performance. Therefore annual reports can give a good insight into what makes an individual or a firm tick, and how they feel they have performed over a year.
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The Financial Services Authority’s (FSA) own recently published annual report for 2006/07 is a chance to give its version of events and should perhaps be read in conjunction with this year’s National Audit Office review of the regulator. In the report, the FSA outlines how it ‘has delivered outcomes for firms and consumers’ throughout the year under the three headings which cover all of its work:
- To promote efficient, orderly and fair financial markets, both wholesale and retail;
- To help the retail consumer for financial services achieve a fair deal;
- To improve its business capability and effectiveness, so as to make the FSA easier to do business with.
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It is interesting to note in the report the FSA’s response to the practitioner panel’s own report, which highlighted the need for the FSA to ‘get involved at the earliest stages of EU policy making’. The FSA has been criticised, particularly in regards to MiFID, that it was not in early enough shaping the directive and this resulted in the vast amount of work it had to complete to implement it, and the large number of changes as a result. Hopefully, the FSA will learn this lesson – we hope that any directive that may result from the White Paper on Mortgage Credit is far more sympathetic to our current regulation.
Too much responsibility
AMI believes that over the past year, and with its future work already mapped out, the FSA is taking on too much. The annual report identifies the work the FSA is currently involved in and to say this is vast would be a gross understatement. Just to give you a flavour of the ongoing projects, we have the move to principles-based regulation; the Retail Distribution Review which could represent a sea-change for IFA firms and possible read-across to the mortgage sector; the FSA’s work on financial capability and improving financial literacy; projects such ‘Treating Customers Fairly’; not forgetting the number of thematic reviews that are undertaken – in the mortgage sphere alone we have had further reviews on quality of advice, self-cert and non-conforming mortgages, lending into retirement, and assessment of affordability.
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All this points towards a regulator taking on a lot, and as we have mentioned many times, a regulator perhaps in a hurry. Just focusing on the move towards more principles-based regulation is a massive task, with an impact not just on the way firms are regulated but also on how the regulator goes about its task. This is estimated to cost in the region of £50 million and AMI has called for a cost-benefit analysis to justify the amount of money and the perceived positive outcomes it will bring.
McCarthy acknowledges that the FSA itself is going through ‘a process of far-reaching changes’ in the way in which it is run. These changes may well be designed to ‘improve the quality of output and the efficiency with which it discharges its responsibilities’ but how will they impact on the work that the FSA continues to do in the mean time?
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It would seem like the FSA is juggling many balls in the air – we would question its ability to keep its eye on all of them. A step back and a priority list would be warmly welcomed by the firms it regulates. Constant change and upheaval will not bring about a stable situation; indeed it will only add confusion to those who have to continually change their practices to maintain compliance. Our members do not wish to be regulated by an FSA which is over-extending itself and hope that next year’s annual report has fewer projects listed and a more concentrated approach to those that really matter.
