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No cure for the befuddled FSA

As the swine flu pandemic breeds shock-horror tabloid headlines, a far more dangerous condition continues its inexorable creep, producing even more worrying long-term health concerns for UK plc.

The technical name for this condition is Acute Regulatory Spongiform Encephalopathy but as this makes for a poor acronym, it is more commonly called Mad Regulator Disease.

Apparently, the infection can lay dormant for years, with the victims carrying out their daily activities oblivious to the inner changes, the turmoil that at some stage is certain to erupt.

The symptoms are not readily identifiable but a careful analysis over a period of time may confirm a positive diagnosis. There is currently no cure for this condition, a general election notwithstanding, and there are some who believe that a mass culling of the infected creatures would be a mercy although there may be attendant human rights issues.

One of the more obvious warning signs occurs when a victim behaves in a befuddled and bizarre manner. One recent indicator involved a switch to principle-based regulation, a transition which was surprisingly and clumsily reversed. Admittedly, such action could also be symptomatic of psychosis so a 24/7 vigil is warranted.

The various RDR documents certainly indicate bewilderment. Like the disease itself, the various propositions have morphed so as to avoid any of the prescribed treatments. Fortunately, the dodgy medicine originally prescribed by the ABI proved ineffective, as did the parasecticide remedy recommended by the BBA. Measured quantities of logic suggested by the IFA Defence Union and Aifa have also failed although on this occasion the patient failed to take the required dosage.

Even more confusion recently because depolar-isation has been ended after a 37-month trial run, a period shorter than most West End shows, during which the consumer has suffered both puzzlement and detriment. Now, having indicated that mortgages and protection would be left untouched, we have menacing noises regarding their eventual inclusion. Such actions suggest advanced paranoia, another telltale symptom.

Maybe regulation should take notice of the UK health system. Those that can and want to will pay for treatment which they perceive to be better than that of the NHS. The majority, who cannot or will not pay, go with the NHS, where the cost is met by regular contributions called National Insurance.

Back in December 2005, Dan Waters explained that the FSA’s position on policy changes mirrored that of EU Commissioner Charlie McCreevy, who he quoted as saying. “Every new piece of legislation that crosses my desk has to show that it provides a clear benefit to the European economy. I ask simple questions – is there a case for action? Is it the EU that is best placed to act? Is a regulatory proposal the only possible solution or are there less intrusive, less costly alternatives that can achieve the same objectives? Only if I get a “yes” to all these questions will new proposals get my stamp of approval.”

On this basis, the latest regulatory remedy must fail because we all know that less intrusive and less costly alternatives are available. Let us hope that wiser heads are able to diagnose a cheaper and less intrusive solution, other-wise the typical consumer whose financial body is currently coughing and sneezing will find himself descending into full-blown delirium.

Returning to the matter of protection, I find myself struggling to envisage how its inclusion within the mooted no-commission world could work. Invest- ments are not “sold” whereas protection generally is. If I am right, and I am, then the problem of selling the concept and the product to a client who needs it becomes far more difficult.

With a mammoth protection gap, £2.3tn at the last count, one would imagine that the political parties and their regulator would be imploring advisers to help reduce it. Instead, we hear those tired old noises about potential detriment and misselling.

As one of the voices which stated that protection is difficult to missell, I find it astonishing that Dan Waters should have an issue with advisers switching from investments to protection. After all, the industry has been urging a move to protection for years.

In truth, I am not sure what Dan is implying. Is it that regulated investment advisers are likely to missell protec-tion? I suggest that if they are that grasping and deficient, then they should not be permitted to continue advising clients on pensions and investments either. You can’t have it both ways, Dan.


Long distance

For the past 20 years, the pension industry has been talking about rising longevity with an increasing air of panic. How it affects the funding calculations for defined-benefit schemes, the pensions of those saving in a defined-contribution scheme or how people will phase in retirement rather than select one date to collect the carriage clock.


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