As a completely independent broker, I am supposed to be totally against proposals that small brokerages could be multi-tied and describe themselves as quasi-independent.
I do not know the exact structure and obviously how far these proposals will all go but let us take the ultimate step.
A small firm of practitioners (for instance, two partners and four staff) could be tied to two different companies for their pension requirements. Company A could for personal pensions and company B for executive pensions.
They then could be tied to another group for their Isas, a further group could provide life insurance and perhaps a final group would provide the ubiquitous with-profits bond for their clients.
I am expected to throw up my arms in horror and express my disbelief that my soldering on as a completely independent practitioner has been thwarted at a stroke.
I wonder, therefore, why, in some ways, I welcome this new initiative. For a start, I believe it will be a way that charges can be reduced on investment products – and there is a definite need for that.
I also suspect that commission earnings will be tightened in the coming years but, in the meantime, there must be a solid base of small practitioners who can offer the personal service to the local population.
I do not believe it is the small practitioners that undermine the whole charging and commission structure – it is the fact that every Tom, Dick and Harry can have an agency with all the manufacturers of investment products.
This leads to the crazy situation whereby a practitioner can put together an excellent plan for a client using five or six different companies.
He might then find that the client has contracted the business through a back-street discount broker, who stole the business on the basis that he did not do any of the work and can work on far lower levels of commission than a full service practitioner.
You cannot tell the client that he has lost the future ongoing service when he sees £1,000 saving on initial commission.
If all small practitioners were persuaded to deal with just four or five firms (and I suspect many of them do already), they would no longer be under the same threat. It would be unlikely that the five or six investment products they have used in an investment plan were exactly the same products with which another small (discount broker) had sec-ured multi-ties.
The biggest players in making sure any change in the polarisation rules work are the life companies and the unit trust groups.
They should be insistent that they stop this leapfrogging of commission and almost cease the universal payment of the top rates of commission to everyone.
Unless a brokerage is promoting a company's product and has sensible volume in that company's product, then the rate of commission should be 0 per cent.
In all other commercial undertaking, the price that an agent gets for not stocking, not promoting and not supplying the product is 0 per cent. To me, it makes considerable sense for small firms to have a multi-tie arrangement. I think the big worry is whether the banc-assurers will abuse this system to their own ends.
I hope the industry will not totally reject multi-ties as the thin edge of the wedge. It could result in everyone getting a thicker wedge, including the clients.
Have I any other concerns? Indeed I have, a very serious concern and that is that the life companies and investment management groups will not be selective on how they remunerate their agents.
They will be too keen (persuaded by their incompetent, useless salesforces) to afford one-man bands maximum commission agencies against the entire range of products.
The only way these new rules will improve the lot of the entire industry, and most of all the lot of the investors, is if, after the new rules come into force, only brokerages who are providing reasonable volumes of business have agencies at all.
I find it very unlikely that that will happen but it is the life companies that want these new rules so they should pol-ice the offer of agency.
Peter Hargreaves is managing director of Hargreaves Lansdown