When I became an IFA around 14 years ago, I started under the naive impression that IFAs and insurers worked together for the benefit of clients.
Any illusions I still had were shattered when this Government came into power, immediately removing Alistair Darling to be replaced by Helen Liddell. She used her diplomatic skills to encourage insurers to cave in and pay compensation to almost everyone who claimed they had been missold pensions.
Mick Newmarch of Prudential was the only person who stood up to her but he was ignored by the rest of the industry and subsequently disposed of by the Pru.
In other words, no insurer was prepared to stand up to the Government and defend the millions of endowment policies that they themselves produced and were marketed over a long period of time. The directors of the insurance companies, of course, did not have to concern themselves with this, since the fines and compensation were paid not by them but by shareholders and/or policyholders' funds.
Recently, we had a change of heart by the Government when it realised that stakeholder charges should be increased from 1 to 1.5 per cent for advice to be paid for. What happened? Insurers told us that they still could not afford to pay a reasonable level of commission, since they needed the extra 0.5 per cent to shore up their funds.
Now we have the fiasco of the Financial Services Compensation Scheme levy being dumped on IFAs completely. The main cause is that it has been open season for a number of years for anyone with an endowment to claim that they have been missold to, since everyone knows that insurers are likely to cave in. So why shouldn't IFAs just pay up and shut up?
Life insurers have now indirectly created an industry of compensation, as can be evidenced by a quick look on the web to see how easy it is to get free advice on claims. Insurers are quite happy to ditch IFAs while they look after their own multi-ties.
Any IFA hoping to remain in the industry should join Aifa and the IFA Defence Union, which can be accessed through www.ifabonus.co.uk.
Principal, GR Associates, Highworth, Wiltshire