The industry is now confronting the inevitability of change to polarisation. We believe the stakeholder regime at least will be changed although there is no certainty that depolarisation will be extended to the whole of the market.
Given this, from the point of view of IFA businesses we think there is a great deal to play for. Phase two is not a foregone conclusion and the consultation on the second stage of reform is not a done deal – unlike the first stage, which appears to be.
But it would be wrong to write off the first phase. Last week, we pointed out that removing polarisation from some products will make it much more difficult to hold the line on the rest of the market.
But even taking phase one in isolation, it would be bad practice to say the first stage must simply be accepted when every day IFAs tell us it is not a safe way to proceed.
Abandoning phase one would mean abandoning the consumer interest. We also know acceptance of the change to stakeholder in isolation from other pensions is very poor policy that carries several inherent risks. The adviser sector is duty-bound to issue a warning on this.
We also see problems with the other two proposed depolarised areas – direct offer and Cat-standard Isas – but it is ironic that stakeholder the area most likely to change is also the most hazardous.
In the first stage of the campaign, we posed 10 questions to the regulator and Government. At least five were not answered.
We contend that if a genuine attempt had been made to answer these questions then it would have been very difficult to introduce wholesale change to the regime.
So perhaps it is no surprise that few answers were forthcoming. To do so would have meant ministers confronting several serious blind spots in their view of the financial services industry. It would also mean coming out from behind the smokescreen of consumer detriment and face the real issue of pushing stakeholder.
Our campaign will not go away but it will take a new turn at this point. In the second stage we will continue to warn about the problems with phase one and phase two.
We also suggest steps that IFAs should take in a bid to increase confidence in the sector and to guard themselves against wholesale changes in future. It will not suggest at any stage that the tied side is some sort of den of unprofessional bad practice – this is not the case – but we will point out the problems.
Now that change is more likely, our focus will change to one in which we try to show intermediaries how to cope if change does come although we will still campaign for common sense to prevail.
Perhaps most important, we will use this stage of the campaign to canvass views from providers and IFAs on the way ahead and strategies for coping so that, at the very least, readers are aware of what others are thinking and doing and are not left isolated. This campaign will have four aims in its second stage:
To warn the Government and the regulator of the consequences of introducing changes.
To attempt to inject openness into the debate and make sure there is genuine consultation.
To alert brokers to what both providers and other brokers are planning.
To suggest ways in which IFAs can cope with the changes if they do come.
Please call John Greenwood on 0207 943 800 or email firstname.lastname@example.org with responses to the next phase