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Outside edge

I recently had the benefit of a discussion with a senior person at IBM who used an analogy to explain that sudden change often provokes more action than when it is gradual. It concerned a frog sitting in his cold-water pond who jumps out when boiling water is poured in but remains in his pool when the water is heated up gradually.

For the last two years, we have seen a reduction in charges and the reaction of the IFA community has not been dissimilar to the frog with his water being heated up. We notice the change but it is not enough for us to jump out of the pool.

Despite the fact that the financial services business model is being demolished rather than adjusted, the public are more concerned with Equitable Life and are wondering whether this is indicative of the financial services industry as a whole.

The rush into buy-to-let has some of its roots in a subconscious distrust of what is intangible, such as pensions.

The news that an “independent actuary” has been appointed was heralded as a step forward. Why was it not announced until now or did the 16 per cent reduction need to be out of the way before this person was seen to be active?

Given the PR from the Axa Sun Life orphan assets issue, he will be well used to making unpopular strategy but the skill needed now is not in mathematics but in the communication of the deal.

Having met many Equitable policyholders through the Sofa initiative, it is clear that those with with-profits annuities may be the ones with most to lose if a relaxation in the rules on annuities is not delivered.

However, given Equitable&#39s approach to open-market options, this relaxation must be a policyholder&#39s right, not at the discretion of the life company.

Bacon & Woodrow has suggested that the communications skills of the new team at Equitable still need some improvement if the goal of transparent and clear messages is to be achieved.

To raise a complaint forgets the confusion which followed the 16 per cent reduction, where the letter from the Equitable created a totally different impression from what had actually happened. It does seem to smack of double standards.

While we are on the subject of alleged professional misconduct, this must mean that any appointed actuary could be similarly accused where policyholders could argue that a misleading account was given of any insurer&#39s position either now or in the future.

It is not possible to be selective if a complaint of this nature is upheld. Once the genie is out of the bottle, it is impossible to retrace your steps, as IFAs know all too well since the pension review changed not just our processes but how the general public view us.

The current spat between Equitable Life and Bacon & Woodrow is simply evidence that a truly independent actuary (that is, one not paid by the Equitable nor briefed by it) is the only way the policyholders will feel comfortable with any deal that is offered to them in the next few weeks.

If the Government is not inclined to rescue the Equitable policyholders, then perhaps it could pay for this essential arbiter.

Perhaps we could regard the polarisation review and Sandler review as the boiling water poured into the pond. They may be unpleasant but, if they spark enough of us into action, then they may be the very catalysts we need.

Robert Reid is principal of Syndaxi Financial Planning

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