Anybody paying attention, whether pro or anti the retail distribution review, will have realised the home team is playing a sly and cynical game. As I have droned on about previously, the game is played by the use of unprovable and inaccurate statistics and the spraying of unfounded allegations and innuendo.
The following statement made to the Treasury select committee by Hector Sants has not received the attention it deserves. He said: “We do not have trust with small firms.”
This was immediately queried by Andrew Tyrie MP, who said: “But you have evidence to suggest that small firms are more distrusted than big firms, do you?”
This begat the following response from Sants: “We do not have direct evidence that would enable us to say that and I would not expect that to be the case.”
What are we to make of this? Are small firms distrusted by consumers? Did Hector get carried away with his rhetoric or is this yet more deceitful persuasion aimed at tainting the minds of observers?
A freedom of information request to the FSA asked for evidence of this distrust of small firms. Interestingly, the request did not receive a response to the effect that it was all a big mistake. Instead, I was pointed toward the Wells/Gostelow report – Professional Standards and Consumer Trust – a summary of existing research, published in November 2009.
The report amalgamates previous research into a single, more accessible document. Predictably, there is no mention of small firms being distrusted by consumers. In fact, the research reinforces views expressed by Adviser Alliance and others that those consumers who do use an adviser exhibit increased trust. A confirmation, in other words, that lack of trust extends to financial services in general and not specifically to advisers, large or small.
The report says: “ABI research finds that financial advisers are trusted more than the industry in general and that a larger proportion of consumers trust their own adviser than trust advisers in general. They also found that consumers’ trust in their own adviser is higher in the IFA and insurance sales channel than in the banking channel. That levels of generalised trust are lower than trust between client and adviser is supported by other research”.
This confirms the fact that clients return to their advisers time and time again because they trust them, yet there remains an innate suspicion of the financial services industry because, to the average consumer, this all-encompassing tag includes banks, hedge funds, private equity and other disparate business models.
It is patently obvious that Sants’ allegation is factually incorrect and I hope I am not alone in finding it extremely concerning that an industry-funded quango seeks to apply such deceit by the use of research that actually inverts its public stance.
As Wells and Gostelow commented: “The picture is therefore a complicated one which suggests that trust and engagement are influenced by a number of events and exper-iences, perhaps suggesting further research is needed before we understand trust and engagement more fully.” A statement that could readily be applied to the entire RDR.
Alan Lakey is partner at Highclere Financial Services