We are definitely in a fast-changing regulatory environment. This is shown through the tight consultation period for allowing Catmarked Isas and stakeholder pensions to be marketed through tied agents.
Is this a consultation whereby the result is written before the papers come back in? Probably, but that does not mean that we should all lie back and let it happen.
Over the last 12 months, it has been mainly positive news for the IFA sector. Increasing business levels through IFAs in a growing market, the pension review moving forward to a conclusion, the FSA confirming no requirement for an endowment review, complaints against IFAs very low compared with company representatives, life companies such as Royal & Sun Alliance closing their direct salesforces and assisting their transfer into IFA status and, finally survey after survey showing that consumers are beginning to understand and value the difference between tied and independent advice. And then what?
A review of polarisation? Life companies (apparently) through the ABI have taken a position against putting up any opposition to change.
I would strongly suggest that any changes to polarisation would be ill-timed as too much other change is going on with the introduction of stakeholder pensions, the need to clarify Isa regulations, the work that has to be done in the retirement options area and others.
With more than 4,200 IFAs across our four networks, Misys IFA Services knows that the abolition of polarisation would not be a threat to our members' businesses as consumers will still demand and pay for independent advice. However, we do see it as an unnecessary threat for the consumer and the Government should leave alone what is clearly working.
What of polaris
ation through the back door via the regulation of products? We have Catmarked Isas, stakeholder, mortgages and last week the Treasury announced proposals to simplify credit cards following concerns that users do not understand the charges.
Will we shortly see Cat- marked bonds, unit trusts, whole-life insurance and so on throughout the product range? Will these Catmarked products also be made available through tied agents using similar arguments to stakeholder pensions and Isas?
I was speaking last week in Belfast with Peter Williams, IFA training manager at Scottish Equitable and a past chairman of Sofa.
We had worked together at many of our 16 Independence Day roadshows to over 3,000 IFAs. We agreed that if the scope of Catmarked products expand, with the Government becoming product designers and price-setters (and these are made available through tied agents), then many “advisers” could simply become product salespeople again. That cannot be in the best interests of the consumer as professional independent advice may not be as valued as it currently is.
All IFAs must be aware of these underlying trends and get behind Paul Smee at Aifa to show, once again, that IFAs are united on this polarisation issue for proper consumer reasons. If IFAs were all “commission-grabbing mercenaries” as some like to make out, we would gain much more financially from multi-tie environments.
The future for IFAs is the brightest it has been for a long time but we must not be complacent to the threats that are currently hovering from a regulatory, political and economic standpoint. Let's make sure we all see the big picture and obtain the relevant support that all of our businesses need to be successful.
Andrew Bedford is head of marketing at Misys IFA Services