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Kim North: Relaxed regulation can close advice gap

“It’s life, Jim, but not as we know it.” This Star Trek phrase from almost 40 years ago may ring a bell for advisers today in more ways than one. We are all living lives not seen before, powered by technology, social media and integration of different cultures.

The Englishman’s castle is no longer his home, with home ownership at its lowest level since 1985, according to the English Housing Survey. Of the estimated 22.8 million households in England, just 63 per cent were owner occupied in 2016.

This, alongside higher rental costs, means saving for the future is moving lower down the list of necessary expenditure.

More financial education showing the importance of building both short- and long-term savings is needed and it should not all be left to the journalists. The providers should put their hands in their pockets and pay.

Earlier this month, leading economists speaking to the Treasury Select Committee reported that the disparity in personal savings and pensions between various groups in society was stark.

Three-and-a-half million women have defined contribution pension schemes – less than half the number of men. What is more, men have more than double the £55,000 pension pot of the average female saver.

The economists also predicted the young would opt out of increased automatic enrolment pension contributions in order to save up to buy a house.

It is the responsibility of all of us in financial services to help people save for retirement. We place too many hurdles in front of product purchase. Setting up non-bank savings is challenging.

When consumers do sign up to a product, the way we communicate is poor: complex or unclear language, typos or inaccuracies, and inconsistencies in design or font. The way we take products to market for the young and women, in particular, has little resonance and thus results in low take up.

The rich are 64 per cent richer than before the recession, while the poor are 57 per cent poorer. What is worse is that this widened gap is expected to be permanent.

Those that can afford to pay professional advisers can expect higher returns than the unadvised. Indeed, the RDR resulted in access to good advice being taken away from those who need it and the Financial Advice Market Review has done little to remedy the problem.

The guidance organisations (particularly The Pensions Advisory Service) do well but they cannot answer the question of “which company and which product should I save with for the future?”. This is the problem.

With a big fanfare at launch, robo advisers were heralded as the saviours to fill the advice gap. But if true, it will be a slow burn, with non-advised online propositions holding just 0.9 per cent of assets under management, according to Boring Money.

Regulations need to be less strict in order to help people access financial services products more easily. As Spock said: “Logic is the beginning of wisdom; not the end.”

Kim North is managing director at Technology & Technical



Consumers say lack of advice stops them saving

Consumers think they would be saving £134 a month more if they had financial advice, survey of over 1,000 people has found. The Nottingham Building Society commissioned research shows that 21 per cent of adults say they aren’t saving as much as they could without advice, and are losing out on around £1,600 a year […]


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There are 16 comments at the moment, we would love to hear your opinion too.

  1. So Kim what rules do you suggest are slackened? The rules are there in the main to protect the public. We can all remember the disasters before the rules were in place. I for one wouldn’t like to see a return of the cowboys or the widow cleaner selling ‘a policy’.

    “It is the responsibility of all of us in financial services to help people save for retirement”. Yes if they approach us for advice. I never tire of saying that we are not social workers. If we decide to take on a client (please mark these words well) then of course it is not only our responsibility but our duty to do our utmost for that client. I would contend it is not for us to dragoon the unwilling or the disinterested. That takes us back to the old ‘foot in the door’ practices of the past.

    We aim (I hope) to be professionals and slack rules don’t do an awful lot for reputations. You only have to see what advertising, ambulance chasing and the no win no fee has done for the reputation of some lawyers.

    • Harry, that’s a little disingenuous. We all know the rules mean well but they do little to protect the public in practice. Indeed, there are plenty that create unnecessary work for good advisers and cause confusion for clients.

      Bad advisers will be bad regardless of god or bad rules.

      Good advisers shouldn’t be hamstrung by bad rules.

    • What’s a widow cleaner?

      Also, the correct word for the penultimate sentence of your paragraph is uninterested, not disinterested. The two words have quite different meanings.

      • Julian apologies for the typo. But please get a better dictionary. New OED P 530 Disinterested: Not influenced by considerations of personal advantage.

        New OED P 2022 – Uninterested: Not interested in or concerned about something.

        Your interpretation could equally apply but I think mine may be more appropriate in the context.

    • Christopher Petrie 5th December 2017 at 9:56 pm

      I agree with Mr Katz! It must be Christmas time

    • Harry …The rules are there to protect the public ?

      Yeah how’s that panning out ?

      As for the cowboys and window cleaners…. we have supermarkets and proper hi tech scammers now, even the prince of Nigeria…. he e-mails me on a monthly basis just to see if I want some of his gold, precious stones or cash.

      With all this regulation and rule making, the bar just got raised and the stakes higher, losses bigger !

    • When I worked at a well known life company That did a lot of door knocking and telephone canvassing, back in the 1980’s, they didn’t have a single cowboy or window cleaner working for them, during my time there Harry. They did, however, have one guy that drove to his appointments in an ice cream van.
      No, I’m not joking. The industry was quite a source of amusement back in the day.

  2. Kim,

    I have argued for many years that the acid test for all regulation should be – What affect does it have on the savings, protection and pension investment habits of the nation? If it reduces any of these it should not proceed. Indeed, I spent 3 years on the FSA / FCA’s Smaller Business Practitioner Panel trying to promote this view but it fell on deaf regulatory ears! Why would any regulator voluntarily agree to such a burden being placed upon them? It would make their job far harder but considerably more worthwhile in terms of public benefit! Dick Carne

  3. “…but they cannot answer the question, “which company and which product should I save with for the future”

    But who can? nobody has a crystal ball and it is misleading to promote the view that advisers can select the options that will always give the best result.

    I wish that we followed the example of the medical profession. Doctors are now trained to treat their patient as an “informed partner”. They help patients make an informed decision as to their treatment options. Once that decision is made it is the doctor’s responsibility to carry out the treatment to the best of their ability.

    One final point. Why is it much easier to take out a loan than to save and invest?

  4. Bad regulation can be as damaging as no regulation.

    Isn’t the ideal a state of smart regulation?

    And isn’t that state best achieved by close co-operation between the regulator and the regulated?

    The dangers of no regulation are obvious.

    There is also a danger with an unfettered regulator creating regulations more to justify its own existence than to achieve an efficient and reliable market for consumers.

  5. The above article is completely untenable, the on going scurrilous liberation of clients pension funds by Regulated Advisers requires additional Regulatory enforcement, The Providers did historically pay by providing the swath of Tied agents, with only one remaining SJP! who are Tied Agents exactly as I was once last century, What we really need its tighter Regulation on Regulated Products, and allow the FOS the respect it endeavours to gain and stop Regulated Firms from delaying compensating clients by pushing clearly undefinable complaints onto to the FOS, On-line Partnership comes to mind. The FCA should insidigate a Review of Regulated Firms complaint Rejections which the FOS upholds. Then we should see a reduction in the number of complaints even hitting the FOS!!

  6. Wasn’t the intention of (the original 2007 edition of) the Statutory Code of Practice For Regulators to strike a fair and sensible balance between consumer protection and practicality (for advisers to operate within the relevant regulations)?

    A large part of the problem is that the FSA/FCA have massively over-egged the cake, largely because they were allowed to get away with taking parliament’s approval of the RDR as carte blanche to do whatever they wanted and go into regulatory overdrive like some crazed bull in a china shop.

    As a result, we find ourselves having to produce and burden our clients with 60 page SR’s containing all sorts of material, in which (in the vast majority of cases) they have no interest whatsoever in reading, let alone trying to analyse, dissect or comprehend. Information overload has become the name of the regulatory game and the harder the regulator tries to police it all, the more it gets distracted from so many other more critical issues.

    (Most) clients have no interest in trying to make “fully and properly informed decisions”. Assuming they trust their adviser, they go along with whatever s/he recommends.

    Nobody’s suggesting that advice standards should be relaxed/slackened/dumbed down. But would it not make vastly more sense if so much of what we currently have to send clients was offered rather than being foisted on them whether they want it or not? Or at least very significantly slimmed down?

    • Thier answer….

      No lets double the red tape and paperwork…

      I give MIFID 2

      Which in turn will make advice MORE expensive and in turn, widen any gaps that already exist..

  7. You talk about regulation as if it only applies to our little world of advice. The truth is advice is about 6 pages in COBS, which itself is only about 10% of FSMA.

    Financial services is a huge and complex industry with many thousands of firms involved in incredibly complex wholesale and retail activities across the globe.

    Sure, regulation will always be disproportionate to small firms, but in the main its not there for them, its there to protect the masses from the larger/largest organisations that have literally millions of customers.

    Regulation has protected people from unfair cartel pricing, from wholesale rate fixing, from un-colaterised derivatives and other instruments which filter down to the man-on-the-streets insurance policy, bank loan, mortgage or ISA investment.

    Saying we need to de-regulate just because advisers don’t like the 2/3 disclosure documents we need to produce seems overkill. Advisers can adopt the language on these themselves, they can make them easier to read if that’s the important issue.

    Re-regulation would cause serious problems that most of us don’t even know exist.

    • I’m sure what you are saying is correct Matt, which then leads me to believe even more, Small, smaller advisers/companies need a separate regulator, as its always disproportionate against us ?
      It seems the FCA are quite happy to sweep us into a big pile with the rest of the rubbish, and only muddies the water as to what exactly is expected of us.

      This serves as an injustice to us and more importantly our clients.

      • I suppose that would make sense. A single IFA poses very little risk compared to a bank with 000’s of advisers; yet the regulation for both of them needs to cover the highest risk (the bank). You cant have different regimes for the same thing.

        The cost and difficulty of separating single advisors from the FSMA would probably be prohibitive however. Where would you draw the line? Firms with 3 advisers? 50? 100?

        I cant see it happening, even though it would be ideal for the likes of us.

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