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Planning for a change of Government

The Labour meltdown in the local and European elections should have sharpened people’s minds on the potential make-up of the next Government and its intentions for financial services.

Barring a minor miracle, David Cameron’s Conservatives will form the next Government but much is still to be revealed about what they have in store.

Cameron has made clear his concern about the imbalance between public sector and private sector pensions and this must be a priority. The current system is unsustainable and the Tories must be brave enough to risk the wrath of public sector voters.

One of Tony Blair’s greatest regrets must be he was not braver in his first term and Cameron, quite an admirer of Blair, is surely drawing up plans for a number of “Bank of England independence”-style polices. Addressing public sector pensions must be one of them.

The Conservatives have welcomed the thrust of personal accounts, with auto-enrolment fitting in with Cameron’s so-called “nudge agenda”, although they are wary of issues such as its interaction with means-testing.

They are also likely to push forward with welcome 401k-style proposals to increase flexibility in long-term savings and an end to forced annuitisation.

Shadow Chancellor George Osborne welcomed James Sassoon’s recent report, commissioned by the Tories, into the future of financial regulation without making commitments. It called for a twin peaks’ approach to regulation, with the Bank of England responsible for macro-prudential issues, and questioned the FSA’s future.

There is no doubt a Conservative Government would usher in fundamental regulatory changes but it appears up for grabs where IFAs will fit in the new landscape. Much will depend on what the future holds for the FSA, how much power will it lose, will it effectively become a back office of financial regulation?

The RDR wheels will be well in motion by the time the next Government is formed but a new administration could have an impact on its implementation if there are particular areas it strongly disagrees with.

It was heartening to see so many Conservative MPs present at Aifa’s 10th birthday event last week. The credit crisis has exposed many examples of poor bank advice and highlighted the value of independent financial advice.

When drawing up their blueprint for the future of financial services, a strong and vibrant IFA sector should be central to Tory plans.


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