Since my last article in February, the Leeds United season has gone from average to worse. No turn-round in form or a real change in attitude from the team. No trophies but, I suppose, the same can be said for Manchester United.
There is an audience out there that wants to watch the great Leeds' product of last season but changes are needed – similar to CP121.
Misys has been working with its five networks since the middle of January to research members' views of the future. Back in February, I floated the view that “There is no value in the term independent” on the basis that the term “authorised financial adviser”, as floated by the FSA in CP121, offered more choice for advisers to provide to their clients. We made the point strongly that this surely was not the FSA's intention. I am delighted that many commentators picked up that thought and expanded on it.
Through working closely with Aifa and other professional bodies, we have managed to influence and change thinking in a businesslike and professional way. We were also in close dialogue with the FSA and, indeed, the Sandler team, as you would expect with over 7,500 IFAs for whose advice we are responsible. All this has been constructive and conducted in private – not through grabbing quick headlines.
Now we have submitted our response. Misys, in its submission, very much stands up for independent financial advice while supporting the overall FSA aim to reduce complexity and close the savings gap.
However, we believe there is a need for widespread independent advice in the UK. Consumers' interests are best served by encouraging and improving access to independent advice. The proposals in CP121 would achieve quite the opposite in restricting the availability of independent advice and denying customers the right to choose the preferred method of remuneration.
The concepts of commission and fees are simple, straightforward and understood clearly by consumers, so we have rejected the defined-payment system for IFAs. While individual advisers may wish to operate such a system, we believe that an attempt to define a certain category of adviser by exclusive use of such a system will be fraught with difficulty and open to abuse. Remuneration by commission is entirely compatible with independence.
To be independent, advisers need access to products from providers across the market and need to be impartial in selecting products and providers. The method of remuneration results from the exercise of client choice.
The exercise of that choice is entirely consistent with the spirit of CP121. We find it ironic that a consultation paper aimed at widening consumer choice and improving access to quality advice should propose to remove customer choice over remuneration and deny access to independent advice to all but the privileged few.
While it can be argued that the product provider needs to consolidate, it can also be argued that through natural competition the number of providers will not reduce that much over the next one to two years. CP121 will not have a major impact although the Sandler review and the FSA with-profits review may. Indeed, as two companies merge, it appears that another one launches.
We supply compliance and research services to 7,500 IFAs in the Countrywide, DBS, Financial Options, IFA Network and Kestrel networks. We are the details of our response to all members through roadshows and private meetings. The FSA has the evidence and opinion, now we have to work with it to formulate a workable solution. We think we have helped to formulate clear thinking and brought back value to the term “independent”.
Andrew Bedford is
director of marketing at Misys IFA Services