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MOORE&#39S CODE

It is Monday morning at the offices of National Independent, one of the aggressive new breed of youthful, sales-oriented IFAs. The suits are shiny, the Golf&#39s are freshly waxed and the LIA membership plaques are proudly hung upon the office walls.

At this moment, the guys are clustered in the conference room eagerly awaiting the office&#39s head of sales.

In he walks and the early morning chatter hushes. “Guys,” he says, “I&#39ve got great news for you, we are going to go out there and sell bucketloads of National Life superduper moneybuilder bonus cashplan plus with-profits, unit-linked bonds. Look, National Life has got a squiggle. It has been approved by the ABI&#39s new Raising Standards quality mark code of practice thingy. Now go out there and get my override commission rolling in.

And so they head off for their morning appointments clutching their National Life sales literature, just pausing a few seconds to glance at the pigs flying out the window.

Yup, the quality mark, known as Saltr in another life, is here. The ABI&#39s baby will be there to counter the public&#39s apprehension towards the life and pensions industry because of all the naughty things it has done.

To be fair, there are some good parts to Saltr.

The proposal to rid the industry of the odious practice of charging via bid/offer spreads ought to have been done away with a long time ago although removing it from the life industry is not a lot of good if the fund management industry blithely continues to use it to rake in the extra cash.

Getting rid of things such as capital units and extend-ing the cooling-off period also looks good.

But, as for the rest of it, well, its virtues are dubious to say the least. Some of the other issues Saltr seeks to tackle, such as service standards, are commercial in nature.

The most successful commercial organisations tend to be those that realise that if you look after your customers they will look after you. Repeat business and referrals equal profits. Say it again, guys, repeat business and referrals equal profits.

If I were a shareholder in a life company, I might very well question why the industry&#39s service standards were so bad that its trade body felt the need to take such a step.

As for the more obviously regulatory issues such as the bid/offer spread issue, well, the financial services industry has a well resourced and powerful regulator which theoretically has all the powers it needs to ensure investors are protected from the worst of the industry&#39s excesses.

Surely the cheaper option would be for the industry to ask it to have a look at these issues.

What if insurers were to come out and say: “We think these things are wrong and why does the regulator not do more to stamp them out?” Now, that would be a thing. It would have little choice but to listen.

I can see how the life insurance industry feels the need to be seen to be doing something, to go out there and say, hey, we&#39re the good guys, honest guv, we&#39ve changed.

But the phrase shutting the stable door after the horse has bolted comes to mind and I am sure appealing to the FSA to act on certain practices would improve the industry&#39s image just as easily and a hell of a lot more cheaply than putting forward an expensive extra layer of unwieldy bureaucracy.

The scheme, flawed though it is, might just have a chance if the whole industry is prepared to back it. So far, it has not been so, with a number of leading life offices failing to provide backing.

It may be that it needs time to become established but when those life offices that are avoiding Saltr include some which already comply with many of its key points, it does not auger well.

So what of the IFA? Well,for the decent one, Saltr is an irrelevance.

A good IFA should not need a little squiggle that has taken two years to develop on some product literature to be able to advise a client on what is best for them and on whether a life company is a good one or a bad one.

As for the bad IFA, I would like to think that market forces would force them out of business. As far as I can see, Saltr will do nothing to hasten their removal from the financial services industry.

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