Open letter to Sir Howard Davies
The Government wants the public to save and insure themselves more than they do at present – thus alleviating the pressures placed upon the Government's future finances.
No one would disagree with the principle of that goal but let us look at how this objective is supposedly being achieved and consider the possibility that the Government and the FSA are getting it dreadfully wrong:
The taxing of pension plans.
The taxing of Isas/Peps.
Innumerable increases in other taxes, local and national.
Very significantly increasing the cost of regulation.
The potential decimation of IFAs – on the unproven and very dubious premise that there is inherent bias in commission (which begs the question, can the adviser expand his time to charge greater fees than might otherwise be the case?).
If there are fewer IFAs and costs are driven ever higher, how will that benefit the investing public, who are more likely to save significantly in costs than might be the case when investing through tied/direct channels?
If the public are forced to invest or insure through banks or building societies this will significantly add to their costs (it is also a fact that misselling practices have been dramatically fewer with IFAs than through other sales channels.
Creating an environment where PI costs have soared as a result of retrospective and punitive regulation using totally unfair calculations.
Attempting to create a 1 per cent world, which the insurance companies and investment houses are finally realising is not viable or sustainable.
Causing the financial instability of many insurance companies due to many of the above financial burdens.
Potentially confusing the public with five types of advisers through the ill-advised recommendations of CP121.
It is now impossible to carry out the simplest piece of business without the most complex and time-consuming paperwork.
So far, the Government and – to a lesser extent – the FSA have managed to demonstrate how little our profession is understood by those who seek to improve it. This suggests a hidden agenda that is hotly denied but obvious to those suffering at the hands of it.
If the Government and the FSA honestly want to encourage the public to begin to make appropriate arrangements for their future well-being they need advisers who can offer the public a good, honest and profitable service that will be there over the coming years to provide continuity to the client's changing circumstances.
If you continue to legislate in the way you are what you will end up with is a decimated financial services community that has few independent advisers, all charging fees that very few of the public will pay, and a greater number of tied agents or bank and building society advisers. The number of companies to choose from will be dramatically reduced, further stifling competition.
The upshot of this will be limited expensive advice provided by fewer and fewer to fewer members of the public because, as we in the industry but not the Government all know, very few people seek out financial advice.
Is this what you and the Government really want?If you continue in the way, this scenario is what you will end up with. Why is it so difficult for you to see what is plainly obvious to the rest of us?
Please let common sense and market forces prevail so the public still has a financial services to call upon – to assist the Government and the FSA in their original goal.