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All quiet on the independence front

So, N2 and the end of the old Financial Services Act regime is almost upon us.

Somehow, I do not think we will be remembering where we were on that epoc-hal day like some of us can remember where we were when Kennedy was shot.

But it is a significant date for all that and one which has not been reached without the odd alarum and excursion. Indeed, despite the avowed intention that there would be a seamless transition from one regime to another, the grandfathering process has not exactly been glitch-free. Following our intervention, it now seems the recovery from the glitches will at least involve only the regulator in more work and will not mean that IFAs have anything extra to do.

All that now has to be made sense of is the controlled function lists which have been written in a peculiar form of English intelligible only to the legally qualified. I trust that this is not an omen of things to come.

I certainly hope that N2 gives the IFA community a chance of less restricting, less intrusive regulation.

Certainly, we will be suggesting where the consolidated rulebook needs streamlining in the interests of getting advice to those who need it and we will be looking for evidence that the more positive noises coming out of the regulator about the style of regulation (which we ought to welcome) are being translated into action on the ground.

My main concern is whether the FSA – with its unwieldy range of responsibilities – will be able to show flexibility and speed across the ground without becoming bogged down in the convoluted process required by the statute.

The regulator should be able to help businesses understand what regulation means for them and not have a three-month consultation before that happens.

I continue to see evidence from all the various research studies which are being published that consumers like the idea of independent advice and that they know in particular that it means greater choice for them.

But there is one finding which really puzzles me. There has been research undertaken by IFAP and Aifa working through Adv-ice First into how firms describe themselves to consumers.

I thought I knew what the study would find – plucky IFAs proclaiming their independence from the rooftops at the slightest provocation and, yes, I did intend to use those findings in arguing the case for polarisation.

But I learned yet again never to predict the outcome of research. In the words of Private Eye, “Shurely shome mishtake”. Three times as many of the surveyed tied agents told the enquirer up front of their status, as did IFAs.

If you ring an IFA with a preliminary enquiry, in just under one in 10 inst-ances will you end the phone call knowing that you were getting advice from an independent who can select from across the market and who acts in your interest not in the interests of any provider (two factors of especial interest to the consumer)? Of course, I am sure that this is made clear at a subsequent meeting but is that early enough?

Consumers seem to be really attracted by independence. In another survey, over three-quarters said that they wanted advice which was independent of a bank or insurance company.

So, does this make it a unique selling proposition which should be communicated in the first nano-second of contact?

I realise that I am some way away from the coalface and my perspective may be different from yours so please let me know why my original guess was wrong.


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