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Cavalier approach won&#39t win war on CP121

Since the publication of CP121, I have read the document at least three times. On each reading, there are more questions but no more answers. There are two possible reactions to this and IFAs are split between the two (and a few others for good measure).

There is the Cavalier approach and there is the Roundhead approach. The Cavaliers want a full-frontal assault on the big picture. The Roundheads want to attack the detail in the belief that this will undermine the shaky foundations on which the FSA&#39s proposals for change are based.

Normally, I am a Cavalier. I like the big picture and the broad sweep of argument. Indeed, Aifa has been focusing on this big picture consistently over the past 12 months and I note that the FSA has not actually countered our arguments in its consultation paper but has neatly sidestepped them. Indeed, events in the market since the publication of CP121 have confirmed our analysis.

But the FSA has now set out its big picture and reiteration of our core argument on its own is unlikely to lead to a sudden conversion.

So – for this debate only – I am prepared to act as a Roundhead. I will get stuck in to the details of this issue alongside many IFAs who have been commenting to Aifa and offering input to our work.

We believe that, as we open up the detail of what the FSA is proposing, we will expose gaps in its analysis and that this is the best means of getting change in its thinking. How radical cannot be judged yet.

That is why we are working on a cost-benefit analysis. How else will we show that making lots of IFAs drop the word “independent” from their title will cost a lot but deliver rather less in the way of benefit? That is why we are looking at how the tied side will be regulated. We wish to show how the present proposals are slanted against independents and against consumers, whose need to understand the cost of advice given by tied agents is skated over in the consultation paper.

That is why we have – through Advice First – commissioned an external researcher to go through the FSA research to ensure that its frequent references to research findings in its conclusions are justified.

We also need to know what other parts of the industry are saying to the FSA. That is why I and my colleagues are spending much time talking to providers and other trade bodies. Stockbrokers, for example, have a voice with the FSA and have never been great fans of polarisation.

The work is necessarily detailed, it is complex and it cannot be done overnight. It is certainly the boring option as we plough through reams of paper and, horror of horrors, pages of statistics.

But is there really an alternative? We will certainly use our paper to restate our basic arguments in support of the virtues of polarisation but this will only be effective if it is backed up.

There is another angle to the consultation process. It is important that the FSA&#39s proposals are given adequate public scrutiny. I am pleased that the consultation paper is being opened up to Parliamentary scru-tiny by the All Party Group and, we hear, by the Treasury select committee. This is exactly in line with our representations.

We are not going to be short of opportunities to state our case but are going to have to have a well worked through case to state.

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