The proposed scrapping of the present system of polarisation is the worst example of abuse of power by Government and big business that I have witnessed in 40 years in this industry. It will not benefit consumers in any material way and will lead inevitably to further confusion as the distinction between independent and tied advice become even more blurred.
It is not so much a question of moving the goalposts but asking if anyone has seen the pitch.
This is simply a matter of payback time for the banks and building societies for rescuing the Government from the potential embarrassment it faced when nobody wanted to market stakeholder pensions. To achieve this meant a partial relaxation of the polarisation rules and the CP121 proposals represent the quid pro quo part of the same package.
Much of the evidence put forward to support the proposed reform does not stand up to scrutiny and most consumer bodies and the media are against these changes.
Consumers will be forced into the arms of the banks, building societies and product providers who will continue to operate a commission-based arrangement. There is no evidence to support the view that a wider range of product provider links will result in any better service than at present.
It is disappointing to learn already that Aifa and others have accepted that no amount of lobbying will change the FSA proposals and have already adopted a pragmatic approach. I suggest they put forward an alternative. A simple and less complex formula would be as follows:
Retain the present polarisation system for all distribution channels.
Reinstate the maximum commission agreement.
Encourage banks, building societies and other interested parties who wish to offer a wider range of products to become an IFA.
At a stroke, this would eliminate any alleged commission bias and ensure that access to professional advice and the best products becomes more widely available.
Will it happen? I doubt it, as we all know that banks and building societies will make more money for themselves under the proposed system, leaving the consumer to be served by salesmen whose allegiance is their employer rather than their client.