Is the financial services industry being pushed into the Government's own fantasy world in which analysis, fact and intellectual rigour have been replaced by spin, urban myth and self serving argument?I think so and Mr Sandler has done little to reverse it.
The first thing to say about Mr Sandler's report is that it is an intellectual giant in comparison to the hastily issued CP121. He has many intelligent and thoughtful points to make about the present regime, not least his argument that there needs to be a proper definition of misselling to avoid the present ludicrous paper war that imprecise regulation has created.
However, imprecision is exactly what the Treasury and the FSA wanted. When I appeared in front of the Burns committee, I made the point that the new legislation had to clearly define the role of the regulator and by doing so what constituted misselling.
The Treasury wanted the FSA to act as its minder, defining and redefining all its activities as Government policies failed or succeeded. Not surprisingly, with an ex-Treasury mandarin chairing it, the Burns committee kicked this point into touch – a fate which sadly awaits Mr Sandler's excellent argument.
More perplexing was his retelling of both the CP121 “biased advisers” argument and the expansion of the stakeholder principle.
Any analysis of CP121 would conclude that the regulator singly failed to find any meaningful proof of bias despite unending rewrites. Such evidence that was presented would not amount to proof at a murder mystery weekend.
The desire to expand the stakeholder principle is even more bizarre. Stakeholder pensions were meant to be the answer to the lack of savings in the middle-income groups but, despite considerable Government and industry publicity as well as pressure on employers to start stakeholder pensions, only 100,000 of those targeted, a mere 4 per cent, have taken out one of these cheap and simple products.
I believe there are three reasons for this. First, one can never underestimate the general apathy and lack of interest that the British public can demonstrate in all things financial.
Second, without compulsion, pension provision will join the general clamour for consumer preference. It will compete against far more exciting and more easily promoted products and services. What do you think the average 20-year-old would prefer – £10 a week contribution into a pension scheme, the benefits of which will not be apparent for 40 years, or two weeks holiday in Ibiza?
Third, the most compelling reason is a singly political conundrum. If those on average and modest incomes eschew the pleasures of the moment for future financial stability will they be improving their situation or will they be busily be saving themselves into a poverty trap.
Unless and until politicians can clearly enunciate what provision will be available and how those willing to save will benefit, no amount of cheap and simple products will give the public confidence.
But that brings us back to the Sandler report. I suppose that the worst thing that can happen to a report chairman is that his report is ignored. By pandering to the Government's current fetishess, he is ensuring he gets a hearing. If this tactic results in some of his more thoughtful ideas being adopted then it might have been worth it.
Perhaps the Government would like to ask me to do a report. I would focus on the protection gap, which is the bigger issue, concentrate on disciplined savings rather than muddling savings with budgeting and restrict the ability of the regulator to rewrite history on behalf of the Government.
Most of all, I would challenge the politicians to define their welfare policies over the next 40 years so that we can assess where we need to save. Do you think I will get a call?
Garry Heath is chairman of Impartial