I find myself looking with trepidation and sadness at the future that lays ahead of us in financial services. A multiplicity of headlines flash past, each signalling a deeper plunge into chaos for consumers and regulated practitioners, independent or not. Providers will be caught up in penalties, fines, increased costs and lower performance, to the detriment of consumers.
The Consumers' Association will continue to badger us and cast about for new causes to blame.
All this because those who control the levers of power either cannot or will not see beyond the immediate boundaries of their artificial domain.
Before I am accused of being negative, let us measure the so-called progress we have made as an industry against the juggernaut of consultation papers, discussion documents, reviews, previews and a handbook that probably now outstrips the Encyclopaedia Britannica.
In the 33 years since I came into the business, I have borne witness to a familiar cycle of events. In my first year, we had the Investors Overseas Service scandal, with colossal losses to policyholders whose unit-linked funds had been pillaged through lack of vigilance and supervision by the DTI and the company's own management.
The resultant cry from consumers and Government was for greater controls and tighter regulation of financial services.
Professor Jim Gower was later commissioned to produce a report on the industry and the beginnings of today's regulatory spiral were set in motion. Within a relatively short time, we had controls in place in respect of commission income and a clarity of status that ensured a level of transparency that could benefit consumers.
The maximum commission agreement, which had ensured business was not simply placed with the highest-paying life office, was demolished as a result of the intervention of the Office of Fair Trading.
For all its imperfections, Fimbra delivered many of the basic protections that were essential in the distributive side of our business but were the authorities satisfied? Not likely. The PIA was foisted on the industry and with it a further assault on the sanity of all who conscientiously plied their trade within it. The new authority pursued dubious claims against practitioners, who found themselves enmeshed in a web of procedural requirements.
It is now apparent that, with the collapse of the sacred cow that Equitable represented, the arguments that resulted in compensation payments for some pension transfers were decidedly unfair and highly damaging to the industry. Worse, the real culprits, who legislated to facilitate the introduction of personal pensions and who exhorted the buying public to break free of their chains and go independent, got away scot-free. Nor did the new legislators acknowledge Government responsibility for the pension transfer scandal.
The stability of the Fimbra years was rocked further by another assault on the structure of investment products and the 1 per cent world was introduced to the industry.
Toadying product providers rushed to comply and demonstrate they could achieve low-cost and no-cost products.
Where are we now? The clarity of the distributive channels has been shattered, leaving consumers once again to fall victim to chicanery and confusion. Product providers will continue to kowtow to the authorities while struggling to conform to the Sandler suites, with the few crumbs of concessions that a mildly sheepish Treasury might concede while trying to bolster the dying stakeholder monster of its own creation.
If you thought the above was a complete resume of the well-meaning but amateurish efforts to “clean up” our industry, think again. For a start, I do not believe there is any well-meaning element in any of it. Well-meaning people may attempt something but, when their lack of knowledge or expertise becomes apparent, they step aside and let the experts show the way. Not our authorities. There are too many self-opinionated elements that could never bring themselves to agree that anything they proposed could be wrong.
Take the quest for the ultimate qualification that the regulators seek to achieve. Many a practitioner of high quality and performance may not have had a single GCE to their name but, through a process of learning on the job, they were able to negotiate highly complex pension schemes, self-administered facilities, loanbacks, buyouts, transfers and retirement planning, inheritance tax planning, setting up policies in trust and so on. But all of us were required to take a hastily concocted FPC exam to justify continuance in the business.
Did anyone care that there were some who could not cope with the artificial situation of an exam room and were forced either to join a larger grouping who simply bought in the requisite bookworm to ensure compliance or leave the business? Yes, some did leave.
They may have been close enough to retirement to make the prospect of a trouble-free life appealing sooner rather than later.
But it doesn't end there.
We now have the academics who are besotted with the idea of an industry awash with PhDs. These eggheads continue to invent new certificates and exams for
each new constituent component that comprises the insurance industry.
After 30 years of arranging mortgages for clients, I find myself having to take an exam that requires me to answer multiple-choice questions on half-a-dozen mortgage cases within two hours in the alien environment of a driving test centre, when I would ordinarily take a day or more to ensure that a single case is well researched, prepared and presented. At the end of this charade, I am given a print out of all the areas in which I am deficient so that I can brush up and pay for a retake. I will keep my money and my sanity.
Next up is a turn of the screw on general insurance. Practitioners who have looked after their clientele for decades will have to sit exams before they will be allowed to continue in practice. Where will it end?
There are a few bookish types who find accumulating qualifications easy. If the country produces enough of them, the industry will thrive. If not, we will see the new underqualified solution, which will dumb down everything to the level of decision trees and tick-boxes while reintroducing the principle of caveat emptor.
Where did I hear that before? Oh yes, when I was doing company law in the 1960s. By the way, that qualification is not worth the paper it is printed on, according to our regulators.