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Francis sets ABI tone for the future

When ABI director general Mary Francis called on the Government to stop involving itself in the designing and marketing of financial products, it marked a radical departure of tactics by one of the most influential trade associations in financial services.

Francis was addressing a fringe meeting at the Labour Party conference in Brighton which was also attended by Treasury economic secretary Melanie Johnson and FSA director of consumer relations Christine Farnish.

Francis told the Government it should learn the lesson of the Millennium Dome and leave designing and marketing to the experts. The Treasury should stand aside and let the industry take the lead in producing simple and effective savings products.

She said: “The lesson of the dome is that Governments are not experts at designing, selling and marketing and yet the Government has got pretty deeply into designing financial products, Isas, IPAs and stakeholder. Our regulator is pretty deeply into providing consumer information which you cannot do without effective marketing skills.

“Governments too often succumb to complexity and over-design, especially where tax is concerned. The lesson for the Government is now to stand back and let the industry take forward the task of designing simple, accessible products.”

This was the first time in recent years that the ABI has openly criticised the Government at such a public forum. Previously, it has conducted most of its lobbying behind closed doors.

Even more interesting is who made the comments. When Francis joined the ABI in June 1999, she came on board not as an industry source but as a civil servant with knowledge about how the Government works.

It was expected she would act as an effective intermediary between the industry and Westminster, smoothing over a relationship that had been through a rough patch.

Sources within the ABI say the remarks were not an isolated occurrence but instead mark a definite change in strategy that has been in the works for some time.

They say the industry sees the Government controlling the agenda and the initiative in the progress of financial services and the ABI wants to show it represents a respon-sible industry able to control its own destiny.

Sources say the Government and the industry can expect to see more public comment from the ABI. They say the trade association wants to reassert itself as the voice of the industry.

The strategy first began to circulate within the ABI about 18 months ago. The reason it has taken this long to become public is that it has been a challenge to sell it to both people within the ABI and the industry at large.

Taking on the Government does have its risks, however, as some have found. Former director general of the now defunct IFA Association, Garry Heath, tried to fight back against the Government in forum over the pension review.

After some of Heath&#39s comments began appearing in the press, a debate was held in Parliament about the IFA sector and the effectiveness of the IFAA.

The result was the demise of the body, which has since been replaced by Aifa.

The Government seems determined to continue playing an important role in designing financial products.

After Francis made her comments, Johnson replied that the Government needs to take a lead in the area.

She said: “It is important that people have confidence in the financial products they are investing in, which is something they have not always been able to get from the industry.”

The industry says it is about time organisations such as the ABI stand up to the Government and engage them in public debate over its policies.

Clerical Medical pensions strategy manager Nigel Stammers says: “No one respects a yes man or woman. It is good for the industry that the ABI is prepared to speak out on matters of concern.”

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