View more on these topics

A matter of choice

“Choice” has been the maxim for the first few weeks of 2002. While there has been a whirlwind of policy issues since the start of the year and it is difficult to know which way to face, my agenda has been dominated by two major events.

What are they? Well, it will not take readers too long to guess. Annuities and polarisation are at the top of my in-tray at the moment – and look set to remain there for several months to come. Both appear to be about “choice”.

First, polarisation. While there has been a great outcry in the past week about the implications of the FSA&#39s pronouncements on the future of advice, I am not really surprised by the outcome.

In November 2001, FSA chairman Howard Davies gave the marketplace a fairly strong clue as to the likely direction of the super-regulator&#39s thinking.

But the Treasury&#39s attitude towards polarisation has been clear since the 1997 election. Labour has been unhappy with polarisation since it came to power and has been looking for this opportunity to sweep it away. The onset of N2 was the only moment to wait for in that regard.

I am not just fawning to the readers of this publication but the Government does believe – wrongly – that the overwhelming majority of the ills of pension and endowment misselling can be laid at the door of IFAs.

While this is unfair, it is highly likely that the FSA&#39s changes will go through after the consultation period ends in mid-April. The question now is how will IFAs adapt to these changing market circumstances?

I think the reality of the IFA community is that it is highly entrepreneurial and is destined to survive moves to depolarise. Commission disclosure and bancassurance have not made for gloom and doom – in fact, the very opposite.

One thing which is very surprising about the reaction to the regulator&#39s announcement has been the whole-hearted support of the Consumers&#39 Association for the continuance of independent advice. And more than that – the availability of independent advice for as many people as possible.

But this was the tragedy of polarisation – and one the Government sensed. Those who most needed access to “independent advice” were unable to access it as the IFA community focused increasingly on high-net worth clients.

The demise of polarisation is in much part due to the inability both of IFAs and product providers to engage fully in the Government&#39s social exclusion agenda.

This is where depolarisation gives intermediaries a major opportunity – the chance to engage with consumer groups in a campaigning coalition to ensure independent advice has a future. For so long, groups such as the CA have been “bogeymen” to IFAs but now there is the opportunity to work together.

Working together should become a longer-term objective of consumer groups and the independent sector, for example on stakeholder pensions, mortgages and Isas.

Stakeholder pensions provided the strongest clue to the Treasury&#39s and FSA&#39s likely views on the future of advice – allowing limited multi-ties last year when the scheme was launched.

The Government is now looking for stakeholder to be a success. This is a political imperative and, up until now, stakeholder has not really caught fire.

There is a great opportunity for the independent community to take advantage of the Government&#39s predicament and the key is distribution. Employers are central towards making stakeholder work – and IFAs are best placed as the major introducer of employee benefits.

It seems clear that now would be a very opportune time for the independent sector to make much of this positioning, think more creatively and perhaps bring a sea-change in Treasury thinking about “independence”.

Which neatly brings me to the second major issue in my in-tray – annuities.

Our work with Dr Oonagh McDonald and the retirement income reform working party has been intensive into 2002 and culminated in a successful second reading of MP David Curry&#39s private member&#39s bill – the Pensions Annuities (Amendment) Bill.

It is highly unusual for private members&#39 legislation to progress beyond a second reading and David Curry (Conservative MP for Skipton and Ripon) is delighted to have been able to take the bill further.

This means the bill now proceeds to the committee stage where detailed scru-tiny of the proposed legislation can take place. The signs are encouraging that a large number of MPs – on all sides of the House – are taking a significant interest in the bill&#39s development.

In fact, the committee stage is beginning much earlier than expected and we shall see more debate on the issue in advance of the Budget in March – a development which all those seeking reform should relish.

While I must concede that it is likely the Govern-ment will try to kill the bill in committee, the fact is the legislation is going to be given a good airing and the arguments in favour of reform of the current system will be properly addressed.

Of course, the bill also comes at a time when the Treasury has announced a long-awaited consultation around annuities.

The important thing for all those seeking reform now is to remember one thing – this Government responds to a welter of public interest.

What reformers need to show is that giving choice in the retirement income market is not just a move that will benefit the rich.

There are hundreds of thousands of pension savers on middle incomes crying out for this change.

Remember “joined-up thinking” – the New Labour phraseology of the first term? Perhaps we can ensure Parliament, Treasury, Department of Work and Pensions and the Inland Revenue can start some genuinely creative thinking on the issue – it would be nice wouldn&#39t it?

Iain Anderson is director and chief corporate counsel, Cicero Consulting


DTI commits £5m to addressing the work-life dilemma

The Department of Trade and Industry is spending £5m to address what it calls the work-life balance problem.The cash will help companies to implement policies that deal with long hours, rigid shift patterns and absenteeism, which the DTI says hit productivity.The Work-Life Balance Challenge Fund provides free consultancy support worth up to £55,000, allowing organisations […]

A tighter grip

The terrorist atrocities in September provoked a raft of responses, including the need to apportion blame. The finger was pointed at the financial world in general – and offshore centres in particular.Accusations of handling terrorists&#39 finances flew thick and fast as well as some ill-informed judgements about what was and was not permissible in various […]

Newton chooses freedom

Newton has unveiled the Newton UK opportunities fund, an Oeic that aims for growth by investing in a portfolio of between 40 and 50 UK stocks.The fund manager, John Wood, has the freedom to invest in companies of any size across any industrial sector as he is not bound by a benchmark index. Instead, the […]

Britannic boss quits after two months

Britannic Group chief executive Danny O&#39Neil is stepping down after two months in charge for personal reasons.His resignation comes as the group announces an £800m jump in new business to £2.2bn last year from £1.4bn in 2000 on the back of mortgage and retirement product sales.O&#39Neil, who has nine-year-old triplets and an 18-year-old daughter, says […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm