The revelation that Prudential deputy chief executive Barry O’Dwyer thinks some at the FSA have let their individual preferences shape policy will strike a chord in the hearts and minds of many coal-face advisers.
The reality of advisers’ working practices and clients’ actual requirements has never found seed within the consultations, discussion papers and policy statements emanating from Canary Wharf. Indeed, they often read as the confused ramblings of some do-gooder enlivened by the vigour of a born-again zealot.
The old Irish joke ending with, “Well, I wouldn’t start from here” springs readily to mind as on a daily basis we observe regulatory tampering, finetuning, tactical tilting and who knows what myriad subtleties and obfuscations.
Maybe it is time we all stood back and reflected on the pervasive regulatory halitosis that churns our stomachs and makes grown men cry. Let us consider what the industry and clients actually want and how regulatory interference confounds this.
Clients want choice and all but the most obstinate adviser will be pleased to offer this. It may be choice of fees or commission or choice of full or limited advice.
As we know, the RDR, supposedly predicated on the extinction of perceived bias, has denied consumers a choice of fees or commission, this despite the regulator’s own research showing that advisers are more trusted by consumers than the FSA itself.
The vast majority of clients are focused on one specific matter, whether it is mortgage, protection or investment. They do not want to labour through a fact-finding mission that consumes valuable time and results in a tangential conversation.
The FSA fails to acknowledge this truth and its deliberations appear to be based on the assumption that each and every client requires a financial overhaul.
Clients want sufficient information to make a judgement, some want more than others but few want a sheaf of documents including fat key facts brochures and the like. Providers insist that they need to provide this in order that they comply with FSA edicts. What an incredible waste of paper, ink and resources when brochures, prospectuses and key facts are provided and then discarded by uninterested clients.
These are the very same irrational consumers that cannot be trusted to make financial decisions and tie their shoelaces. The FSA is not interested in their requirements, it tells these consumers, using advisers as the medium, that they should read and retain these documents. That it is good for them.
Apart from the diminishing forests, the losers here are the advisers whose time and resources are being used in a foolhardy and time-consuming manner. This is the problem when a regulator believes it knows best. That its many theories, hatched within grey-walled corridors, provide consumers with financial enfranchisement. That these same theories will somehow invigorate the market – a positive disturbance.
Now, how do you begin to redesign the world of intermediation? We need to recognise the reality that the consumer has both benefited and suffered due to regulation. Much of the benefit is historical while the suffering is both current and ongoing.
“Forget it pal, that will cost a pretty penny,” I hear you say. “Upwards of £2bn probably, where do we find that?” Well, if we put an end to the RDR torment, I reckon we will achieve the right outcomes and have enough left over for Hector’s goodbye bash at Claridges.
Alan Lakey is partner at Highclere Financial Services