Many years ago, when my partner and I were making regular trips over to Northern Ireland to visit her family, one of the first people I met there was Uncle Archie.
Archie was a lovely, kind man, someone who would always top up your glass when you were down to the last finger of Bushmills.
He was also, it must be said, was not the world’s greatest businessman. Over the years, a small litany of unsuccessful commercial ventures began to sap Uncle Archie’s mojo and made him a target for the sharp tongue of his long-suffering wife, Hazel.
At which point, having exhausted all other options, he became an L&G salesman. By then, Archie was already in his 50s, theoretically counting down to a difficult retirement under the baleful eye of Auntie Hazel.
Suddenly, he was reborn. After a rocky few months while he slowly established and built his own client base, Uncle Archie began to meet – and then beat – his sales targets.
Soon he was earning a very comfortable living doing a job he loved: talking the hind leg off a donkey over a cuppa and a chocolate Bourbon. Archie, now happy as a pig in clover, would often say he wished he’d fallen into this line of work many years before.
His bonhomie, genuine friendliness and extensive list of contacts helped, of course, as did the fact that, by and large, the life, pension and investment products Archie sold were, most definitely, not among the worst in their class
Every time we met I would gently rib him about being a “mere” L&G salesman and compare his work to the sunny uplands of genuinely independent financial advice.
“Don’t knock it,” he would reply, as he re-filled my glass, “What my clients get is a decent product. As for your independents, they’re slippy-tits: they sell like me, they’re just better at pretending they don’t.”
A slippy-tit, for the uninitiated, is Northern Irish for a sneak trying to wheedle something out of you. As Archie saw it, unlike many IFAs he never made himself out to be something he was not.
Uncle Archie is no longer with us, sadly. But I still think of him with fondness, most recently after reading an article in Money Marketing by Techology & Technical managing director Kim North about the iniquities of the FCA’s latest paper on inducements.
In it, Kim lambasts the FCA for failing to admit “inducements rules at RDR implementation day should have been tighter”.
Where the FCA failed, presumably, was in not fully understanding that unless you draft more rules than Terry Pratchett’s fearsomely complex Cripple Mr Onion game and tie the industry in endless knots, providers and advisers will always seek new ways to behave in a sneaky manner towards their clients.
Kim’s other point was that, from where she sat, apart from non-regulated protection premiums being hiked to pay their salespeople more commission, she had “not heard of any money, gifts, seminars, MI, marketing, even trips abroad that make me raise an eyebrow.”
All of which strikes me as rather strange. Just how does Kim feel about the practice, identified by the FCA, of firms obtaining “substantial” payments from life insurers for “support services” such as promoting products and arranging training events?
These insurers, and only these insurers, were chosen for the advice firm’s product panel, according to an MM report in September.
In another case taken from the FCA’s report, MM reported an insurer which “significantly increased” its spending on support services offered by an advice firm, “with little justification of the business benefit or the amount paid.” The insurer’s expectations in return for such an increased spend need no explanation.
Personally, I would have assumed advisers were grown-ups and it was unnecessary for the regulator to have required explicit rules to stop such a blatantly obvious subversion of the RDR’s aims.
Instead, what seems to be happening in the area of inducements and, in recent weeks, that of trail commission, is the industry’s finest minds are seeking to undermine the RDR’s best intentions. So the FCA belatedly acts to stop them.
At which point, Kim turns not on those guilty of demanding, offering or accepting what are little more than sales bribes, but the FCA for not hogtying the industry earlier.
But it is in her final few paragraphs of her column where she raises the spectre of direct salesforces rising like phoenixes from the ashes of a spent IFA distribution channel, that Kim’s greatest fears are laid bare.
Kim writes: “This will means thousands of highly sales trained salespeople with a narrow range of expensive products. They will naturally compete to sell more than their colleagues.”
Yes, some of them might go down that route. But unlike the 1980s and 1990s, where largely untrained former double-glazing salespeople chased after frighteningly naïve consumers, things have changed since then.
Qualification requirements are more onerous, products are generally more competitive and both the media and regulators are marginally more observant.
Who knows, maybe a well-trained and tightly-regulated direct salesforce, offering a limited suite of good-value products, might be better able to assist consumers than a sanctimonious bunch of supposedly independent advisers who are, in Uncle Archie’s immortal words, just a bunch of slippy-tits.
We can but hope.
Nic Cicutti can be contacted at email@example.com