As part of a GCSE course, my son brought home a video which looks at the behaviour of sharks. This reminded me of that famous phrase from Jaws: “Just when you thought it was safe to go back in the water…”
I felt a similar hesitancy when I read the comments made by Ron Sandler and Paul Myners to the Treasury select committee. Although I agree with many of their sentiments, I think it is impertinent of them not to have realised that a large part of the problem in encouraging saving is the level of complexity which has been introduced by successive Governments.
When I spoke with Sandler at the time of his research,I made similar comments but it was quite clear that, along with many individuals at the Treasury, Sandler and his research team were not thinking from the point of view of the consumer but from their own perspective. Many of the individuals who have been commenting on the current lack of savings commitment by the UK public have a very poor appreciation of what the average individual requires.
It is interesting to note that Sandler stated that the 1 per cent price cap was only an estimate or guideline figure. It also became clear that he recognised that the cap could be raised. However, he felt that competitive market forces were more than likely going to reduce charges below 1 per cent when providers realised how cheaply simple products could be distributed, especially when the explosion in demand he expected came to fruition.
I am really not too sure where Sandler is getting his information from but the charges that are applied under a savings contract have never, in my opinion, influenced a customer's decision to make an investment.
Sandler went on to suggest that the terms “adviser” and “independent” should be restricted to those who are working solely for the investor and where there is no commission relationship with product providers. I am confident that many consumers are quite comfortable with the concept of fee-based advice where any commission is offset against the fees due to be charged.
Myners and Sandler may not feel that it is entirely safe in the water for consumers at the moment. If the banks are successful in their dilution of the menu to the point where it only applies to the independent sector, then the sharks will have won and the IFAs who survive will need to be very strong swimmers and, given Jaws' ability to leap on to the beach, pretty fast sprinters too.
Robert Reid is a director of IFA Syndaxi