What a week. It started with unintentional humour from Hector Sants of the FSA who stated, without a twitch, smirk or blush, “I have been a proponent of accountability to Parliament.” We then heard that the FSA is confident that Europe will allow it to gold-plate Mifid II so that the RDR experiment can be legitimised.
When I first entered the industry, regulation did not exist and neither did the compliance industry as there was not any regulation to comply with. The term “broker” was used to describe those who claimed to offer advice on products across the whole of the market.
In those days Allied Dunbar, Abbey Life and a plague of smaller unit-linked insurers dominated the market with innovative products and pushy sales methods and whole of market advice represented a minority of product sales.
The introduction of regulation via Fimbra and Lautro served to push the value of the independent brand and within 15 years the phrase IFA and an understanding of independent advice caught hold with a sizeable section of consumers.
This was undeniably to the advantage of consumers and ensured that, generally, better advice and better products were marketed.
Little did we know that this period represented a pinnacle, that the term IFA would be tainted and circumvented in a calculating manner by the very body charged with a statutory objective to promote market confidence, financial stability and consumer protection.
Looking back, we can see that none of these objectives has been met. Manifestly, all three are in worse shape than they were 10 years ago when the FSA rose phoenix-like from the ashes of the PIA.
Back in 1999, then Treasury Secretary Alan Milburn described the incoming FSA as “a world class regulator”.
The reality is that it has been a total failure and, having blundered over the banking crisis and the anti-consumer nonsense known as depolarisation, it is now dotting the i’s on this manifesto of destruction by effectively discarding the independent brand.
Rather than making it the choice of preference, the FSA has seen fit to lay waste to the IFA sector by using the RDR to eliminate 30 per cent of the IFA population.
To this catalogue of wanton vandalism we can add revisionism which has resulted in the meaning of the word independent being modified. The consequence being that the vast majority of current IFAs will have to discard the independent descriptive and use the deceitful “restricted” moniker.
I do wonder though whether overall this is of overwhelming importance.
After all, the nonsense of depolarisation was the first nail in the coffin of independence and consumer understanding. Every successive hammer blow has embedded additional confusion. Many firms will now have the task of explaining to their clients that while they are no longer independent they are still whole of market.
Will my clients be disadvantaged by a change of descriptive? Apart from the costs involved with this exercise, very little will change for my clients in that I will still search the market for the most appropriate solution and I will continue to explain the difference between tied and whole of market.
The rewriting of history persists while the rest of us continue to feed the hand that bites. To paraphrase boxing promoter Don King, only in financial services.
Alan Lakey is partner at Highclere Financial Services