We have enjoyed the Easter break and the royal wedding and it is now time to seriously consider the issues that face the distribution of financial products and services.
The RDR has been discussed and objected to in miles of column inches and spoken about on many occasions. We have the overriding principle of TCF which continues to bite, with big fines levied by the FSA, soon to be the FCA, this year’s product interven-tion paper, which has serious ramifications for the distrib-ution of products, and dozens of papers of consultation and guidance.
Why does millions of pounds of consumer and industry money need to be spent for one letter change – S to C? The regulator’s name change will affect all product, advice and service providers’ literature, status disclosure and online activity. May I plead to those that govern and set financial services rules, please reconsider this name change to save the unnecessary waste and cost.
After all, does the general public really care what the regulator is called?
One of the objectives of the FSA, as shown in the RDR papers, is to raise consumers’ trust in the industry. In order to establish this trust, there obviously needs to be clarity on what status financial advisers have. It is obvious that access to the whole of the market is far more advantageous to all than to have restrictions.
Money Marketing’s recent front-page article reported that Unbiased.co.uk will continue to promote whole of market mortgage advisers, solicitors, accountants and financial advisory firms only. So what if we read that big independent financial advisory firms will also offer restricted advice?
We all know that fees plus 20 per cent VAT are not able to be stomached by all and that restricted or even simplified advice may be the right solution, particularly for the young, until indep-endent financial advice can be afforded.
Simplified advice is about to enter another round of FSA consultation, which will suit the banks as simplified advisers will not need QCF level four qualifications. When we know what simplified advice looks like, I expect quality firms to offer the three options to clients.
Simplified advice is for those who want to invest no more than £100 a month or have straight-forward protection needs. Restricted advice is for those who have some unfettered assets and have more than £100 a month to save and may have simple pension issues and, of course, independent advice is for those with more complicated technical or planning needs or with considerable money to invest.
All three routes to advice could be offered by an IFA, with clients directed to the service that suits them most. Remember, it is the first time that IFAs can refer clients “down” the food chain to restricted or simplified advisers. I refer to this model when making presentations as the “happy house of advice”, where everyone serious about financial planning will aspire to see an IFA.
I think it is close to a human right that consumers should be able to see an independent adviser offering the gold standard of financial advice if they wish to. Well done to Unbiased for standing strong.
Kim North is managing director of Technology & Technical