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Measure for Measure

Accountability is a funny thing. Everyone recognises it is a good thing, yet few people rush toward it with open arms.

When the FSA introduced depolarisation, we all had the right to ask what success criteria would accompany it. What was it going to achieve and when? How would we know it had been successful? What was its purpose and when would we know it had been achieved?

Yet, there has been little emerging from Canary Wharf that suggests what success criteria will be used.

News has emerged though, that the FSA is not recording the number of IFAs post depolarisation.

It seems to me that the success of depolarisation can only be measured one way: its positive impact from a consumer perspective. Perhaps evidenced through a recorded and recognisable upturn in more people being able to access a wider and better value range of financial products. If not voting with their feet, then certainly with their cheque book to save more, protect themselves better, and take a more enlightened view of their preparations for retirement.

Another measurement must be the impact on the industry. The number of firms offering independent or whole of market advice before and after depolarisation sounds like a useful measure to me.

Some say that keeping track of any change in the type of advisers in the market is useful. Others argue that it is part of the regulator’s consumer protection remit to understand the changing patterns of advice. It could also be seen as part of the regulator’s duty of care when it comes to having an eye to an efficient and orderly market. This has nothing to do with interfering with market forces and everything to do with understanding what the effects of change are.

Given that IFAs pay FSA fees based on the number of authorised advisers, rather than turn-over, it is surprising that the FSA recently said it won’t be in a position to publish even the number of advisers in the market, let alone their status. No one could possibly believe the regulator keeps such a badly planned database that it cannot produce such figures.

We are within our rights to ask the FSA to state clearly how it will measure the success of depolarisation.

The other option is for the sector to come up with its own success criteria. For IFA, provider and consumer groups to agree on what success looks like and then hold the FSA to account based on those metrics.

An even more enlightened approach would be for a single set of criteria to be produced, by the regulator, industry and consumer groups. This would start with consumer benefit – but would not be afraid to admit that there must be some benefit to the sector – and that this may even include a regulatory benefit too.

It is accepted that consumers value advice, so understanding changes in how it is deliv- ered should be viewed as essential by the regulator.

Given the seismic shifts and costs introduced by depolarisation, it seems fair to ask about how it will be measured, to ask questions about accountability.

It would be a pity if this opportunity were lost.


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