The scene, a draughty corridor in Whitehall.
Minister: Well, Sir Humphrey, how is the retail distribution review going?
Sir H: Going? I fear it is nearly gone.
M: You sound a bit unimpressed Humphrey.
Sir H: Not unimpressed Minister, just a bit incredulous.
M: Incredulous? Why should you be?
Sir H: When it all started off, what were we trying to do?
M: Protect the public from cowboys and improve the standard of financial advice.
Sir H: And by public we meant?
M: The man in the street, Humphrey, on the Clapham omnibus, you know who I mean.
Sir H: Well, Minister, I think it depends what street you are talking about. I think we’ve done a pretty good job of protecting the man in Mayfair or Sevenoaks High Street, or a leafy lane in Wentworth. Not so sure about Clapham – although it’s pretty posh there now. As for most of the rest of the country, they’re on their own.
M: What are you babbling about Humphrey? We didn’t like commission-hungry advisers ripping off the public so we banned commission and made investment advisers fee-based.
Sir H: And the effect of that Minister?
M: Everybody gets much better advice from a much better class of adviser.
Sir H: Then why did the recent Financial Services Consumer Panel survey reckon that considerably less people have access to financial advice?
M: Must be a mistake, Humphrey. We also specifically wanted to close the protection gap and ensure pricing wasn’t distorted by commission.
Sir H: The protection gap, Minister? Did you just say protection gap?
M: Yes, Humphrey. I read it was now £2.4 trillion.
Sir H: Indeed, Minister, but I think you have your logic a bit mixed up.
M: And pray tell me why?
Sir H: Well, Minister, we wanted more people to get financial advice but we have reduced the number of advisers. We wanted to protect the public from less qualified advisers but they will now all start selling protection because they can still earn commission.
M: So sales of protection will go up next year then?
Sir H: Indeed they would Minister – if prices weren’t going up because of gender pricing differentials disappearing and the tax system changing.
M: Oh really, Humphrey, that’s a very pessimistic view. That certainly is not meant to happen.
Sir H: Ever heard of the law of unintended consequences, Minister?
M: Yes, it keeps rearing its ugly head.
Sir H: I’m afraid it has again, Minister. We’ve wanted more people to get better financial advice and we’ve actually got less; we’ve tried to encourage protection and sales are going to be tougher to make next year; and loads of good advisers are leaving the business because they don’t feel they can make a living in the new regime. So I’m not really quite sure if Joe Public is a heap better off. Are you, Minister?
M: Oh dear, it’s all very complicated, Humphrey. Still, hopefully we may have some good news for the industry on long-term care.
Sir H: Yes Minister, but probably not in our lifetimes!
The Minister sighs,shrugs and dunks his biscuit… it falls into his tea.
Peter Le Beau is managing director of Le Beau Visage