Our industry clearly faces numerous changes. Enough have taken place already over the past five years. Many have yet to make themselves felt. Many changes in legislation may have a far wider impact on the industry than we have appreciated, making it hard to quantify the likely impact of these numerous changes and assess which issues must be addressed. It is all the more difficult because the changes are sending conflicting messages about their effect.
Polarisation is in the melting pot. Control of design and marketing of pension business has effectively been hijacked by the Government assisted by its tools – the FSA, Opra, the OFT, etc. The Tory Party, having introduced polarisation and indicating its opposition to reversing changes, has changed its mind and decided that multi-tied advice may be the way ahead.
The Treasury has sent out signals which seem to indicate that its ideal world would be one of no financial advice and design, distribution and charging structure of all financial products effectively controlled by the Treasury. If this is the wrong interpretation, then hopefully Melanie Johnson and Alistair Darling or hopefully superior successors can clarify the situation during the election campaign.
Would they like invest-ments to be made automatically into funds with no human input, (presumably two options, UK index trackers or corporate bonds)? Well, of course, Cherie Blair is on record as saying: “We must really see what we can do to help you” to Richard Branson, who put his Virgin name to a pension plan run for him by that Australian Mutual and Provident subsidiary Pearl Insurance offering just two funds, namely a UK index tracker or corporate bond.
Interesting also that the stakeholder pension regime was reckoned to be modelled on the Australian pension regime(now compulsory) and AMP are the biggest of the two remaining providers. Will our SHP be compulsory after a Labour election win? If so, will IFAs even be allowed in future to be involved. Bearing in mind that Opra has banned any IFA involvement in its website, one could wonder.
Bad luck for companies who have always marketed via IFAs. Will they now have to set up their own direct (or multi-tied) salesforce? As IFAs are involved in the majority of occupational schemes, if the future is not for IFA involve-ment, then we are in for a shake-up. If only the uncer-tainties could be resolved. Maybe the true agenda will be published after the election.
The Labour Government obviously has had a secret, dictatorial and inflexible agenda for pensions and financial services. It has made a sham of consultation with the industry while pursuing a path which everyone knows will end in tears, with misbuying of pensions and the consolidation of the industry into a small number of massive companies, cutting choice and advice for the consumer.
It has closed its ears and refused to discuss any rational criticism of its agenda. It must know that the enforced pricing structure of SHPs must under-mine the future of the industry or lead to cross-subsidising of with-profits funds, thus leading to an increased risk of mortgage endowment policies not delivering otherwise obtainable returns.
Tory French & Partners, Wimbledon, London