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Lobby for the cause of advice

It is vital that the retail advisory end of financial services engages now with the Government. In both the savings and the protection areas, private provision needs to replace the retreating welfare state. The coalition is keen to reverse the trend towards a growing unemployable underclass and to stop the fashion for using sickness benefits as a proxy for unemployment benefit.

To date though, the previous Government’s mendacious love of debt has forced this Government to focus on banking reform. The previous error has been replaced by an intention to encourage savings, at least once this initial period of recession avoidance is over. But whereas the current Treasury focus on the banking sector is rightly negative, the rest of us have not screwed up the country’s economy and need now to make our positive case very loudly if we are to be heard. We need to ensure the Government realises the banks are not financial services, they are just a fairly dysfunctional part of it.

Beyond them is a commonwealth of many different businesses committed to encouraging prudent financial behaviour. A legacy of clumsy regulation and poor corporate governance inspired by the major insurers has meant most of the best of this sector are comparatively tiny businesses but there are a great number of us and our potential to grow rapidly is far greater than that of a few tarnished monoliths. I would suggest the key difference between these thousands of smaller businesses and the banks is that a retail banker’s career is not dependent on how well he does for his clients, it is dependent on how well he does for his employer. It is that simple structural truth that renders banks such dangerous firms to do business with. The other end of retail financial services is able to build employment structures that mean the better an employee does for their clients the more their career progresses as the long-term capital value of their employer grows.

I do not think the current Treasury team has this view at all. I think it thinks that our sector is a bunch of mavericks best pruned back to a core that can do little harm if it sells only approved simplified products. I think the very well connected and funded and powerfully self-interested voices of the FSA and the British Bankers’ Association are the voices that Mark Hoban and his team recognise and can relate to. However, having heard Gordon Brown admitting he got it wrong in creating the FSA, I expect the current Treasury team is now more open to learning from those who have successfully endured 34 years of vacillating regulation and banking misselling.

What is needed to answer this latent desire is a clear practitioner focus on careful and positive lobbying. This must necessarily be simultaneous with, but separate from, the current fight to stop the RDR unnecessarily thinning the numbers of those who put the client just ahead of their need for short-term profit, rather than well behind it. While that factional fight can continue, the longer-term cause needs to be separately explained. It is that the myriad small finan- cial services business form a veritable army, which, given encouragement and public support, can get individuals taking responsibility for their own financial affairs in a way no Government or bank or website ever could. We are a resource well capable of helping the Government in its biggest financial fight. We just need them to see how easily it could be to get us doing just that.

Tom Baigrie is managing director at Lifesearch


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. You are, of course right Tom and your argument is a sensible one.
    However, It will never happen when the likes of Hoban and his opinion of us, which was obviously handed down to him by the fsa, since in reality he knows nothing about us, remains in his present position.

  2. Jane Finnerty 3rd May 2011 at 1:25 pm

    Local Government cuts are now resulting in more people being ‘told’ that they need to seek some form of advice to ensure they make best of what they have when it come to their insurances, savings and assets – Research by the local Government Intelligence Unit LGIU makes some intersting points see it at

  3. Simon Mansell 3rd May 2011 at 9:14 pm

    To engage you need two parties and one needs to listen! The FSA solution is to to kill off independent financial advice in the UK for all but the wealthy.

    The people who need the help most will not want to pay for advice. The commission route has the advantage that those who buy subsidise those who don’t – it really is the ideal solution for the problems the UK faces and the idiots at the FSA are about to bin it which will force more onto the welfare state.

    Mark Hoban MP is about to hand over our distribution to the banks – those primarily responsible for PPI misselling and every other form of misselling.

    It gets even more worrying when you look at the full membership on the RDR implementation committee. Hoban takes advice from a string of bankers, advisers to bankers and former FSA officials.

  4. @ Tom Baigrie

    Excellent article, Tom.

    When many years ago I first entered the world of insurance and financial services, I learned that beyond its perfectly honourable self serving interests, (the first charge on any business is its profit) it had a much wider horizon by way of both function and purpose – the ability to provide for many of society’s needs.

    I have watched with growing dismay over the years as many within the industry lost sight of that broader horizon, and in so doing also lost sight of its most important and crucial element – the trust of the public.

    It is in that one aspect alone, I believe your analysis, excellent as it is, falls short. Yes, one objective has to be set against the failings of RDR, particularly its intention to deprive many of the ability to obtain independent advice, and yes, in addition lobby the Government who do indeed need solutions, solutions that IFAs can provide, but regaining the trust of the public has for me to be not only the highest goal, but also calls for the greatest engagement.

    Both Regulators and Governments come and go, all too often they leave behind their legacy of mistakes, and perhaps that is never better demonstrated than today as the failures of the FSA and the last Government leave us with the consequences of the biggest UK deficit and debt in our peacetime history and the constraints they, of necessity, impose.

    The public (and yes, perhaps even regulators and politicians) would welcome those who can demonstrate, and I emphasise the word demonstrate, how to address at least some of the problems the public now face.

    Does that include IFAs? It should.

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