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Outside edge

As a film fan I often quote from the movies to make a point (but not to the extent of confusing celluloid with reality as happened to Ronald Reagan).

One memorable piece of dialogue comes from the film Parenthood when the Grandmother compares life with a fairground ride, where the choice is between a roundabout or a rollercoaster, the former being steady and the latter containing the variety that comes from life&#39s ups and downs.

As an IFA since 1985, I am in no doubt that we are the guys on the rollercoaster, where change is just part of the scenery. Is it not fascinating that the same people who explained that stakeholder was a no-brainer and needed no advice suddenly have decided that advice is essential?

But hold on, they have now twigged that the fixed costs (many of which are compliance related) have led to the cost of professional advice being in excess of what the mass market can afford.

Recent comments from FSA officials indicate that some of them may have aspirations to control the level of fees charged by IFAs. This is evidentially to ensure that advice is available to all and not just to those who can afford the fees. This approach (uncannily Stalin-like) is meant to work in what is currently a free market.

If they decided to fix hourly rates, I cynically predict that the time taken to complete a task will rise to offset this ineffective control mechanism. This is not intended to suggest any systematic overcharging exists in IFAs, it is a comment on the crudity nay stupidity of the controls suggested.

The thought of compliance visits including someone with a stopwatch and clipboard does not bear thinking about.

But wait a minute, as all ideas have some merit, and not always for the purpose intended, why not pay FSA directors on this basis? We the “customers” could observe them and then set a maximum rate based on the value of their contribution.

This could lead to problems, especially given the cap on fees idea, and could leave them without income until they determined a way to reduce compliance and make the rulebook readable. Or is the drive to plain English restricted to the leaflets for the public only?

A former senior person in the FSA once told me that proper codification – rewriting the rules from scratch, for those non-law students among you – could result in a scaling back of staff and a dramatic reduction in the costs, which are ultimately paid by the likes of you and me.

Regulation needs to return to its core objective if the public is ever to believe that the regulator can recognise a problem, let alone solve one.

To suggest that the reason they missed the extent of Equitable&#39s guarantee liability was because of non-disclosure simply underlines the two distinct forms of regulatory procedure, the providers need not suffer under intrusive regulation whereas the IFA has to suffer detailed review of the past and present. If, as was recently alleged, the previous directors of Equitable did conceal the facts deliberately, then this is could amount to corporate fraud and the sooner those responsible are brought to book the better.

I close with some news that David Rangley of the London Institute of Chartered Accoun-tants has asserted that CAs&#39 ethics are superior to those of the IFA. Quite apart from the fact that generalities are inev-itably wide of the mark, has he forgotten those CAs who were involved in Equitable, Maxwell, etc or does their code of ethics exclude corporate bodies? I think we should be told.

Robert Reid is principal at Syndaxi Financial Planning


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