Lives: Winchester with his wife and three children.
Education: “When you get to my stage in life, where you were educated becomes irrelevant.”
Career: Started out in the Civil Service at the Department of the Environment, then moved to the Building Societies Commission where his roles included secretary to the commission, head of external affairs, head of central policy unit and secretary to the Building Societies Investor Protection Board. In January 1999, became FSA group manager (conduct of business standards division).
Career ambition: To make a success of the FSA as a single regulator.
Life ambition: To have a long and happy old age.
Likes: Music, particularly singing, and working.
Dislikes: Travelling on the Jubilee line.
Drives: A Renault. He would like a Jaguar but says the FSA does not pay him enough.
Peers say: “He is very open and approachable, he understands the issues very well and is keen to listen to the industry.”
Unusually for an FSA henchman, Norman Digance is well known for his openness on issues facing the regulator.
“Norman speaks his mind, which is quite unusual for the FSA. You can get very useful insights into FSA thinking from him,” says one industry source.
After laying down the roots of the controversial stakeholder pension decision trees, for example, Digance admits that financial advice is proving to be more important than ever.
He has also confirmed that questions will be asked on why group personal pensions are being recommended above stakeholder pensions – only two weeks after the FSA insisted that GPPs are under no more scrutiny than the ongoing monitoring of stakeholder sales.
Digance, the FSA's group manager (investment business policy), told a recent Money Marketing conference that certain justifications given for GPP recommendations under the “at least as suitable as stakeholder” rules are causing concern.
He says: “There has to be an interest in their continuing sales. GPP sales are increasing, as are stakeholder, but stakeholder must get a fair crack of the whip. It is quite fair for the regulator to take an interest as to how people are responding to the 'at least as suitable as' rules and the justifications used. If a recommendation is on the basis of the range of funds available, it in itself may be questionable.
“IFAs will have to stop and ask themselves whether they could be subject to challenge if they are saying the only way to get particular investment funds is through a GPP. Advisers need to be properly and prudently cautious when justifying a personal pension.”
The former civil servant, who got his grounding in financial services through a lengthy involvement with the Building Societies Commission, works as part of David Severn's team at the FSA looking at conduct of business standards in the retail market. This covers child trust funds, pensions, long-term savings, long-term care cover, open-market options, persistency levels, pension credits, polarisation and disclosure.
Digance has made his name spearheading the introduction of stakeholder pensions and is popularly known as the father of decision trees. But he once said he would rather they had not been invented and still admits their merits are very difficult to prove in practice. Decision trees were widely derided by the industry on their introduction but the subsequent changes have kept Digance in high regard as someone who is willing to listen.
He will be scrutinising the productivity of decision trees next year, when the FSA intends to undertake in-depth research to assess how successful they have been. “We have got to give decision trees a fair crack of the whip but we do have to have a better understanding of which channels decision tree sales are coming through. The vast majority of sales are coming through IFAs but it is very difficult to know if individuals have used decision trees or not.”
Digance is very aware of the complex process that decision trees involve for the industry and a consultation paper is due out in the next couple of months to assess how further updates to them should be handled.
D igance is given credit in the industry for being the face of the regulator in a demanding time and making the effort to take part in the conference circuit, speaking publicly on complex regulatory issues.
One industry source says: “People do know who he is and he does a good job of putting a face on this difficult stuff by going out and being seen. But to a large extent he is powerless. He has to make the best of regulation that is itself flawed.”
Many accept that the FSA has to work within a difficult legislative system and Digance is the first to admit that the concept of stakeholder – that of designing and regulating a product which removes the need for advice – will not necessarily work.
He says stakeholder was designed on the basis that it could be sold without advice and it was hoped that decision trees would help in this process. But he believes this is proving not to be the case and that advice is more important than ever. “We have got product standards but people still need advice. The pension market itself is very complex and the context of deciding whether or not to buy a stakeholder is not easy,” he says.
Digance is now issuing a challenge to the industry to come up with new ways of designing products and advising the public. “People need advice and it is up to the industry to ensure advice is available to them and is not priced out of the market.”
But, the industry cries, how can advice be accessible to all when price caps make it impossible to include its cost in product charges? Digance believes the fact that insurers are still paying remuneration to IFAs shows that, despite the pressure on margins, there is no excuse for the advice channel to disappear. “If 60 per cent of sales are coming through the advice channel, they have somehow worked out how to pay IFAs,” he says.
But Digance is not professing to have all the answers and no one has envied him the task of tackling the myriad of existing pension regulation.
With the Christmas season approaching, Digance is building up for a hectic time. A semi-professional singer, he is a member of the Royal Choral Society and will be busy taking part in carol concerts. At least that might strike a lighter note than pension legislation.