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Flying in the farce of adversity

My last column was a comment on the number of reviews with which we are all deluged. Since then, response on the regulation of long-term care has gone out of the door marked Exit to be replaced by the FSA consultation on the compensation scheme coming in through the French windows in the best traditions of Whitehall farce.

Next, our consideration will be given to Cat standards and the Treasury&#39s idea of generic Cat-standard advice interviews. This is a subject which has so far failed to capture much attention even among the personal finance press. This may be down to there being other more pressing issues or it may be down to a generally apathetic feeling about the whole idea.

If it is the latter, then the Treasury would do well to reflect on the message which is conveyed. This is not the sort of proposal which should be forced on the marketplace. It should be a response to a clear consumer-driven need. The Treasury will otherwise be answering a question which no one is asking.

No news yet on who will conduct the “son of Myners” review into personal finance, the terms of reference or whether we will have the opportunity to comment on them in draft.

There is a thread running through these reviews. The Treasury, by its statements and actions, appears to believe that the low take-up of financial services products, especially by the less affluent, is down to their cost. It also believes the cost of advice should be explicit for investors.

Its prime concern is, we can guess, with those investors who do not have a continuing relationship with an adviser. I believe some of its premises are flawed but they must be the starting point for our responses.

We are putting together the facts and arguments with which to address these issues. There are several arguments which we can offer, not least some of the findings from the FSA&#39s own consumer research.

Remuneration cannot be ignored. I realise the old commission versus fees argument causes a few yawns. Add allegations of commission bias and the result is narcolepsy. Another trip round this particular assault course does not exactly fill me with excitement but we are going to have go round it. The relevant chapter of the Myners report refers to both subjects.

How do we respond? Not defensively as if IFAs have something to hide. IFAs should not be afraid to advertise their good quality advice and service costs. Nor do I believe in obscurantism. The cost of advice should be clear to the client and I believe a choice of its being met through commission or fees should be available. As to which route is chosen, this surely is a matter for adviser and client, not for imposition by a third party.

If we can set out the logic of this position with conviction and clarity and show that it works in practice, then I hope this particular part of the assault course will not need to be revisited.


JPMorgan Fleming Asset Management – JPM Europe Smart Index Fund

Monday, 23 April 2001.Type: Sicav.Aim: Growth by investing in European equities.Minimum investment: Euros 5,000.Place of registration: Luxemburg.Investment split: 100 per cent in European equities.Isa link: No.Charges: Annual – class A shares 0.75 per cent, class B shares 0.65 per cent, class C shares 0.5 per cent, class D shares 1.25 per cent, class X shares […]

Scot Prov head of product marketing joins Build Store

Former Scottish Provident head of product marketing John Hay is joining self build specialist Build Store as director of marketing and product operations. Build Store offers a full service for people building their own homes. It offers a self-build mortgage to give tailored finances for self-build projects. Hay was with ScotProv for 24 years and […]

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Stakeholder has been hanging like a cloud over IFAs, with reactions ranging from apocalyptic predictions of the demise of IFAs to casual nonchalance and the belief that little will change.While pundits have had their say, George Street Research has carried out a survey among IFAs on what impact they think stakeholder will have on their […]

Halifax and Bank of Scotland plan £26bn merger

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Stop the cold-calling

Royal London is pleased to support the petition calling for a ban on cold-calling for pension and investment products. The petition, launched by IFA Darren Cooke of Red Circle Financial Planning and hosted on the Parliamentary website, calls on the Government to ban cold-calling for pensions and investment products. A similar ban is already in force […]


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