Given the number of takeovers, strategic deals and rumours circulating in the financial services industry recently, one might be forgiven for thinking phase two of the polarisation review was already decided.
The industry appears to be acting as if the matter is done and dusted, with the result being that multi-ties are on their way.
Whether it's Amp's purchase of Towry Law, Barclays white-labelling deal with Legal & General, Bristol & West's takeover of Willis National or life offices such as Allied Dunbar, Norwich Union and Clerical Medical reaching out to IFAs with multi-tie propositions, it seems that the industry may have prejudged the outcome of the FSA's review.
And all this before the review has even taken place. Officially, the regulator is expected to release a consultation paper in November or December, with a final decision on the future of polarisation not expected until 2002. Yet, the prevailing opinion seems to be it is a question of when, not if, polarisation will be scrapped.
IFA Syndaxi Financial Planning principal Robert Reid says: “I think the industry thinks it is a done deal.
I think they think the outcome will be multi-ties.”
The question must be asked why this is so. Official claims by the FSA that it is open to a frank and real discussion about the way forward, seem to be falling on deaf ears.
Phase one went through, and even though virtually all facets of the industry repeatedly made the point that relaxing polarisation would be detrimental to the consumer, the Treasury still allowed multi-ties for stakeholder pensions and depolarising of direct-offer advertisements such as fund supermarkets.
Many in the industry think the Government and FSA are hell-bent on pushing through full depolarisation for a variety of factors such as the European single market issues and the desire to improve the lot of customers who use direct salesforces and banks and building societies.
Others say that with al
the jockeying for position going on, someone must be tipping off the industry. If one or two players were acting in a similar fashion it might be considered an exception but when so many are, it is difficult for some to swallow that it is coincidence.
Adding to this confusing mix are speeches from Treasury officials, saying it is all or nothing for polarisation, as happened last week when policy adviser Keith Davis was speaking at an industry conference.
The regulator appears to be fighting back against this sentiment of finalism, with its head of the polarisation review David Severn warning providers that they should not act too aggressively on what they think may be the result
of the review.
Severn says while it is perfectly acceptable for the industry to be talking about what may or may not happen, firms that take steps to position themselves in a post-polarisation world may find themselves worse off if things turn out differently.
LIA director of public affairs John Ellis says: “I think providers would do well to take note of David Severn's comments. They should be wary of making assumptions about the outcome of phase two of the review. We do not know the outcome yet.”
Autif deputy director general Sheila Nicoll says: “It is not very sensible to pre-empt any decisions being made by the FSA. I think the industry would do wise to listen to David Severn, considering he is the man making the decisions for the regulator.”
Another argument which points to the fact the FSA is still undecided is the large amount of research it has commissioned from economic consultancies Charles River Associates and Cap Gemini Ernst & Young.
If it was so convinced that multi-ties were the best result, why wouldn't the regulator just say so instead of spending the industry's money on expensive third-party work?
For its part, the industry says it is not acting in a manner which suggests it has pre-judged phase two.
Axa spokesman Peter Webb says it only makes sense for companies to be discussing the future direction of distribution within the industry but this does not mean it has prejudged the outcome of the review.
Webb says: “We are planning for what we think might be likely scenarios but we are conscious that we do not know what will actually happen.”
Bradford & Bingley technical director Rob Guy says: “It is quite sensible for the strategic people within these companies to have conversations about the way forward. It would be odd if they did not do something to prepare themselves for what may happen.
“Over the last two to three years, product providers and IFAs have been very open about discussing industry issues. It would be unhealthy if there were a complete
Chinese wall between providers and distributors.”
Money Marketing reported last week that Clerical Medical is the latest life office to try to snap up IFAs. The life office says while it is in discussions with IFAs about polarisation, it has not tried to lure any with a multi-tie proposition and does not have a multi-tie proposition to offer.
Whatever the industry believes about the result of the review, it will have to wait like everyone else until next year to see what will happen.
It seems like only sound business strategy to discuss the issue both in private and
public but the industry
would be wise to pay attention to David Severn's comments about acting before a decision is made.