Ten years ago, I was one of a group of parents involved in a battle to save our local primary school from closure by the education authority.
The procedure involved an announcement by the LEA that changes were being considered, including potential closure. This progressed into a consultation. We parents naively believed logic would sway the authority into rejecting the closure but it quickly became obvious that the consultation was a ruse designed to flag the idea well in advance and soften the blow when the county council eventually ratified the closure plan.
The parents formed an action group which devoted effort to uncovering the truth behind the LEA’s proposal. The closure was ostensibly a financial decision but we destroyed that argument by calculating that the supposed £42,000 annual saving was actually only £16,000, from which had to come the cost of transporting children to alternative schools. In short, there was no saving.
These memories were reignited by the latest RDR publication. Back in 2007, ideas and suggestions were floated which were “consulted” on. After three years of discussion, argument and recrimination, we find that the vision of Callum McCarthy is alive and well, having been nurtured into a plan.
The FSA continues to be fixated on the commission = bias myth, a fiction refuted by its own research and acknowledged recently by Sheila Nicholl in her speech to the Association of Luxemburg Funds Industry. She told the conference “We are very concerned that commission bias, actual or perceived, affects the advice.”
As if the financial services industry does not have enough problems with real issues, we have a regulator intent on solving imaginary problems. Would it not be better and vastly cheaper to alter consumer perception rather than fix something that is non-existent?
The pro-RDR brigade will hiss and boo at such logic.
Interesting then that such a celebrated commentator as Martin Lewis at MoneySaving Expert believes removal of commission will diminish the availability of independent advice for the typical consumer. Even the Financial Services Consumer Panel has stated: “Financial advice will be less-widely available post-RDR”.
Like the local education authority, the FSA are deaf to reason and obsessed by the illusion that product transparency will transform the industry and bridge those devilish pension and savings gaps.
Many of the anguished primary school parents projected the same forlorn expressions as the advisers I meet with. Fortunately, a number of the parents did not cave in to the will of the local education regulator. They sought support from sympathetic MPs and after discussions with Charles Clarke, MP, the education minister, he overturned the decision of the local authority – the first such occurrence in many years.
Those who believe the FSA does not know best, that its antics will result in an industry in decline as well as financial depredation for millions of consumers, must join forces to highlight the many instances of illogic to the incoming Government.
Consider the viewpoint recently received from Henry Bellingham, MP, the Shadow Minister for Justice. He told me: “The more choice consumers are given the better, so I would be instinctively in favour of them being offered either a choice of paying by fees and commission or a mix of the two.”
Alan Lakey is director of Adviser Alliance and partner at Highclere Financial Services