I did not come into work in the New Year starry-eyed but I never anticipated the speed and violence with which events started to move. The Standard Life announcement and the high-income bond saga have sent shockwaves through our sector.
By the end of the month, we may well have had the outcome of the Penrose inquiry into Equitable Life. This report will not directly relate to IFAs but its conclusions and recommendations will have to be assessed for their impact across the sector.
None of this exactly gets the year off in confident mode. Not even confirmation that the ombudsman is consulting on the concept of “two free cases” could dispel the feeling of a gathering storm.
This year seems likely to mark the end of polarisation and, for that reason alone, will be a watershed in the development of independent advice. It should surely then be the year when the sector is clear about what it stands for and what its values are.
Harold Macmillan may well have commented that “Events, dear boy, events” were his greatest distraction but we do not have the luxury of allowing events to distract us from spelling out these core values. The introduction of the menu system gives IFAs the opportunity to be clear about the extent, variety and value of what they offer to clients. I think that more clients will be surprised and impressed by what is on offer than will start quibbling about the cost.
Research indicates that many consumers estimate that it takes an adviser two hours to give advice (of which one will be spent with the client). There is quite an education gap. We have the means to bridge that gap – but only if we take the opportunity.
Another opportunity to be grasped is the review of the FSA and of the financial services legislation, two years after N2 (remember N2 – don't you get all nostalgic as you read those acronyms? I thought not.).
One of the subjects on that agenda is whether there should be an appeals process from FOS decisions. This sounds like a thoroughly good principle but the practice is going to take some thinking through. An appeals process would work two ways – it would be as available to a consumer where the Ombudsman found in favour of the IFA as it would where FOS found in favour of the consumer. As I never tire of pointing out, the IFA track record in complaints is good, with two thirds found in favour of the IFA (I am beating that drum in our submission to the Treasury Select Committee).
So paradoxically an appeals process could be more used by complainants than by advisers. There is also the issue of who pays and who hears any appeals – and what sort of precedent is set by judgements in appeals. All this is by way of illustration that there are no”no-brainers” in this game.
There are also few quick wins. We are not going to have a result from all the various bits of the N2 review until next Christmas.
Paul Smee is director general of Aifa