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Chaos theory

If I had to compile a list of the most pointless financial adverts of all time, Scottish Amicable’s Captain Chaos TV campaign would be right at the top.

Captain Chaos was a banana bandolier-wearing 1960s’ character, subsequently dredged up by ScotAm for its last appearance on the small screen some time in the early 1990s. The campaign cost millions to make and almost everyone who saw it cringed for a long time afterwards.

Almost two decades later, another TV campaign is threatening to topple ScotAm’s number one position – Aviva’s rebranding exercise, in which it uses a combination of celebrities, including Bruce Willis, Ringo Starr, Elle Macpherson, Alice Cooper and Dame Edna Everage to promote its change of name from Norwich Union.

True, the production values of the ads are infinitely better than ScotAm’s. Not that we should be surprised by this fact – according to one report I read recently, the entire worldwide rebranding campaign is set to cost the Aviva group a cool £80m. Even if the true figure is a fraction of the amount mentioned, it still ranks as an impressive waste of money.

Apart from anything else, the ads are also confusing. To take one example, what is the point of Alice Cooper informing us that his name at birth was Vincent Furnier? Both are ridiculous names in their own way.

If we were to take Cooper/Furnier at face value, is Aviva trying to tell us that the new brand name is as silly as Norwich Union ever was? In any case, do its customers really prefer ditching a company name with a 200-year-old history in favour of a meaningless palindrome?

An equally pointless attempt to shape the future by coming up with meaningless statistics was unveiled by Aviva/Norwich Union recently when the company declared that the number of registered IFAs will fall to 10,000 from 21,000 by 2013.

It predicts thousands of independent advisers will fail to comply with RDR changes that demand greater professional standards from IFAs, in turn leaving a vast swathe of middle-market “orphan clients” waiting to be serviced by Aviva salespeople.

The company is planning to expand its 100 direct sales staff in a bid to target these orphans, whom it estimates at 2.7 million.

Now, a number of observations are in order here. The first is that it is instructive that Norwich Union/Aviva’s predictions follow hard on the heels of the FSA’s own fumbling attempts to reshape the market over the past two years.

During this time the regulator has swung wildly between trying to wipe IFAs off the financial services landscape on the one hand, returning to the old days of polarisation, before abandoning this attempt and opting for a meaningless halfway house that improves the potential lot of consumers barely one jot.

The fact is that the FSA’s proposed changes offer few, if any, carrots to IFAs who comply with the new regime, while effectively granting carte blanche to all sorts of bizarre sales practices by banks and other direct salesforces who will be able to sell to their hearts’ content while still retaining the designation of “adviser”.

No wonder many life companies, and not just Norwich Union, are quietly positioning themselves to revive their salesforces or create new sales channels aimed at taking advantage of the regulator’s proposals for simpler “guided sales”.

But it is a massive stretch from seeing the potential implications of the FSA’s proposals for consumers and IFAs alike to predicting the halving of the sector within four years.

Apart from anything else, if life companies are really hoping they can make use of the new regime to launch a simplified – and effectively less regulated – way of selling products to customers, they are likely to be in for some major disappointments.

In a little-noticed speech late last year, the Financial Ombudsman Service principal ombudsman and corporate director David Thomas acknowledged that the FSA is trying to facilitate an easier way for providers and the banks to sell to customers, using “innovative prototype sales processes”, as he described them.

But the problem for these processes is that several of them have been tested and found wanting in the past. Of course, it is possible that in the past 12 months, the FSA has been able to come up with much more robust methods. I have my doubts.

Even if I am wrong, it is instructive that the FSA itself has moved away from suggesting that a suitable quid pro quo for adopting any simplified sales process is lighter-touch regulation. If that fails to happen, one of the key reasons for adopting it has vanished.

In any event, David Thomas was at pains to point out that any proposals in the RDR were unlikely to alter the FOS’s jurisdiction over such sales or the legal definition of what constitutes “advice”.

The bottom line is that there is no way of skirting round the issue of genuine financial advice. Consumers need it and IFAs need to be encouraged to provide it. Instead of wasting its money on useless ads and pointless predictions, Aviva ought to be working to help this process, not reviving salesforces that have failed in the past and will do so again.

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk

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