Your report that the FSA and David Severn are “bitterly frustrated and bemused” by IFA reaction to the proposed changes in polarisation must surely be wrong.
This report had its origin in a statement made by fee-based advisers John Baxter and Giles Pidcock of Baxter Fensham. Just suppose that this report was right – the implications are enormous.
First, the discussions and suggestions from the FSA last autumn brought very few actual responses from IFAs. However, there were many reports and letters published in the financial press clearly against changes to polarisation.
What is also clear is that the majority of IFAs are Aifa members and they left it to Aifa to express opinions on their behalf. So the lack of a deluge of individual responses was not a significant factor.
Equally, I do not suggest that CP121 will result in thousands of letters stating that by far the majority of the IFA community are totally against the changes. However, it cannot be denied that the clearest possible consensus is shown by IFA and general industry opposition, as well as informed opinion of journalists, the Consumers' Association and Conservative – and Labour – MPs, that the FSA's proposals do not find general favour.
If Howard Davies, Severn and the FSA do not accept this as a fact, then we are wasting our time talking.
The suggestion is that, as IFAs do not apparently support the proposals, the bitterness which David Severn feels is so great that he wants to refuse to discuss details of the proposals with the industry and just appeal over the heads of the industry directly to the Consumers' Association and other consumer-interest organisations.
We know that Mr Severn has taken consideration of the views of the Consumers' Association. And we know that he did not like them – so much so that he was moved to state that it would require “nothing short of a nuclear explosion to change the agenda” (or words to that effect).
He has made it very clear therefore that there is no point in discussion or meaningful interaction to create a better industry, it is a done deal.
The FSA and, I suppose, the Treasury – who effectively give the commands – have decided that no discussion is necessary. It is going to happen.
It will not be discussed in Parliament. The views of the Consumers' Association do not count. Financial journalists such as Lorna Bourke and Jeff Prestridge have opinions that count for nothing. Standard Life and Norwich Union have opinions that are irrelevant.
As for IFAs, well it now appears that, out of pique, they are to be marginalised for daring not to have a dialogue with Mr Severn.
I fear that what this really means is, if this report really is true, a number of constructions can be placed upon it.
David Severn is seeking a massive deluge of individual constructive criticisms and suggestions in reply to the report. If that is the case, every IFA will have to give it to him. But will he undertake to read them? More important, will he take account of them?
David Severn has made it quite clear, however, with his tasteless “nuclear explosion” references, that it is a waste of time anyway. Do you blame IFAs for getting on with the job of looking after their clients while the system permits?
Any surplus time may be utilised more profitably in planning how to look after clients in the future – under a new regime which clearly takes no real account of genuine consumer interest.
If this report about Mr Severn's bemused reaction is correct, then perhaps he can inform us how he intends to take the argument direct to the consumer. I believe that such an agenda is a splendid idea,as surely the consumer is the most important person of all.
We live in a consumer society – which is good. IFAs, and all other businesses, are here for the good of our clients. So why not totally ignore at this stage exactly what IFAs, and indeed the industry, want but instead set up discussions with consumer groups and the public generally to establish what they want rather than what the FSA feel they have a right to foist upon them?
After this, bring in the IFAs and the providers and their distribution channels and see how public wishes can equate with what the industry can deliver. That would be meaningful discussion, that would be democracy.
Such an agenda does not sit comfortably with someone who makes declarations about nuclear explosions when referring to the very organisation which expressed concern about his proposals, has an untainted record in looking after the consumer and is not motivated by sectional or self-interest.
I think that it is time for the FSA to take a less arrogant view over their preferred agenda and design for financial services and consider for a moment that they do not have a monopoly of wisdom.
There are faults in the present system. However,these need to be addressed by a sensible modification to the present system rather than a destruction and rebuild.
The costs of their proposals are likely to be massive, which ultimately the consumer pays for. The disruption is not in the consumer interest. The proposals as published are not to the benefit of consumers and are likely to reduce choice, raise costs and force consumers to pay fees which, research shows, they do not like.
It will mean in particular that the problem of receiving ongoing advice about existing policies will be seriously aggravated – above all where that policy is with a closed fund such as, say, Abbey Life or one now under the jurisdiction of the Life Assurance Holding Company of Telford. Any IFA who has ever tried to sort out a client problem with them will know the problems, yet the FSA has done little to ensure that clients of closed companies are looked after.
The proposals show a singular lack of understanding of financial advice. I wonder how many of the authors of the programme have any experience of hands-on advice. It certainly means a busy period of time for the regulatory authority's employees, who will have a massive workload.
Eventually, however, it will make their job much easier if the seemingly preferred chan-nel of multi-tie predominates. Forgive me for wondering if this has motivated the call for change. Lorna Bourke thinks so. Jeff Prestridge has suggested the regulator is bored.
Let us get it straight, these proposals have very little support from anywhere. Does that not worry David Severn et al?
Troy French and Partners
PS: If Mr Severn wants my views on the subject, I refer him to MM, January 31. However, if the comments ascribed to him by Baxter Fensham are correct, then I doubt if he reads it. If he stands by the article, then I will be happy to challenge him to a public debate anywhere, preferably on TV with the public and consumer-interest bodies having the opportunity for their input.