It was the single-premium bonds that swung it. Had IFAs had the good sense to steer clear of these blatantly unc om pe titive products, polarisation might just have survived.
But good sense has never been your thing. Instead of avoi ding single-premium bonds with their massive commission and impenetrable char ges, you flogged zillions of pounds worth of them to a bunch of grannies who made the fatal mistake of taking you – and your independence – at your word.
Those clients are now going to find it a damned sight more difficult to survive their retirement and people like me – who have long supported the concept of polarisation – have been left to defend the indefensible.
Well, I am not going to do it any longer. I supported pol arisation because I bel ieved it would benefit British consumers and British industry. I took the view that IFAs would eventually realise that the only way to thrive as a group was to put their customers' interests to the fore.
As more and more consumers grew to trust IFAs, the sector would expand and competition among product pro viders increase. Even tually, we would have in the UK a population that saved, inv ested and insured at the best possible rates. Our financial services companies would be among the most competitive in the world.
So much for the dream. What of the reality?
The reality is that the vast majority of IFAs have proved themselves either too stupid or too selfish to help themsel ves. Far from putting your cli ents' interest to the fore and becoming a force for change, you have shown yourselves to be one of the most reactionary and self-centred group of business people ever to have existed.
And I am not just talking single-premium bonds here. I am thinking about endowment mortgages, the personal pension scandal and your total inability to see that charges and not past performance are the key to selecting a decent investment plan.
Your opposition to regul atory requirements such as the need to carry public ind emnity insurance and profesional qualifications have only added to the general impression.
So what should IFAs do now that the Treasury has decided to scrap polarisation?
No doubt many of you think a campaign to save pol arisation is a great idea but you would be wrong. You may have had a chance a year ago, when I warned you what was about to happen and urged you to do something about it, but not now.
The new thinking at the Treasury is that it is preferable to regulate the product rather than its distribution. This is why stakeholder pensions and Catmarked Isas (both controlled products) are to be the first to be depolar ised. As Catmarks move to other product lines, they will follow.
My advice to those few genuine IFAs out there who do a good job for consumers is threefold.
First, lobby hard to have the category of independent financial adviser ret ained, not only as a concept but as a distinct legal entity and status that direct salesmen and multi-ties are not allowed to claim or infringe on.
Second, get involved with the review of product disclosure that will run parallel with depolarisation and push for the most comprehensive and simple form of charges disclosure possible.
In return, dem and that direct salesmen and multi-ties be forced to disclose their status in the clearest possible terms, for example: “Unlike IFAs, we multi-ties sell a limited range of products that are not necessarily the best in the marketplace.”
Finally, demand that the new product regulation – Catmarking – be made more vigorous, independent and transparent.
If it is to replace polarisation as the primary means of providing consumer protection, a proper statutory framework should be set up for establishing, monitoring and tightening the maximum charges allowed on Catmar ked products.