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Outside edge – John Cowan

It still amazes me to see footballers arguing with the referee when a penalty is awarded. He is not going to be persuaded to change his mind. It is all too high profile for that.

I guess it must be all that pent-up emotion that causes denial and tries to prevent the referee facing up to the reality. There has been some of this behaviour – but not much – since the publication of the FSA&#39s CP121 document.

For the IFA community, it is a penalty. There is no chance of a change of mind. It is the end of polarisation.

We ought to have seen this coming. This Govern-ment has either directly or through its various agencies been sending signals about its intentions. It wants social inclusion and it wants the vast majority of the population to have an understanding of personal financial matters so they are better equipped to make informed choices.

It was determined to simplify many products, introduce kitemarking and dec- ision trees and to outlaw past performance tables. When it took the decision to allow stakeholder pensions to be sold on a multi-tied basis, we had the strongest signal on the future direction of polarisation. So how come the argument was lost? It all appeared a rock solid case.

Even CP121 recognises the intrinsic value of independent advice. Going back to the Government&#39s agenda demonstrates that it has huge concerns over the public&#39s failure to save anything like enough money for their future needs and the likely impact this will have on the public purse.

My view is that many people in important positions in Government believed that IFAs had missold in the past, earned their corn too easily by focusing their energies where the greatest rewards lay, assisted with obfuscation and were not engaged in the great Blairite/Brownite financial services vision.

Put simply, for an industry that is all about communication, losing this argument should be a massive wake-up call for the future.

What of that future? Well, I believe there will be huge opportunities, most particularly for those who can accept the radically changed landscape. For those IFAs who deal with clients on a fee basis, not much will happen to impact on their business. Maybe there will be a slight adjustment to the script in some cases to explain that, although owned by the product provider they are now recommending, they are not tied to anyone but independent.

Going forward, I believe that the product providers will have heard the signals loud and clear and will address the issue at the very heart of depolarising the marketplace.

For the very big brands such as Axa, Norwich Union and Standard, with possibly a new entrant with consumer communication skills, this is an important opportunity to develop a whole new business model built around that Government agenda of reaching out to the largest part of the UK population with straightforward products.

With the powerful combination of providers and distributors focusing their energies on communicating the need to save with Government blessing, there should be no losing arguments in the future.

John Cowan is a financial services consultant

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