It feels that this might be an easy time to frame a conspiracy theory about there being a group of people who are out there with the motive of destroying our advice industry.
As our banks have lost the public’s trust, and continue to shoot themselves in both feet on a regular basis, perhaps there are some who think it appropriate to level the playing field by making intermediaries’ lives just as difficult.
This is, of course, the work of my over-active imagination and perhaps a case of sector paranoia but it might be a plot for a decent short story.
With the recent FSA announcements on the validity of commission payments and financial incentive schemes, Martin Wheatley, as the FCA chief executive in waiting, is setting out a clear vision for a different future. This is a robust attempt to put at least one genie back in the bottle.
Firms are asked to limit their encouragement to their staff to sell. In setting out examples of good and poor practice, the industry is being given the opportunity to put its house in order or else face changed and strengthened rules in this area. While this work is more focused on banks and insurers where products are made and sold in the same place, intermediaries cannot ignore the lessons.
Whilst there is nothing here that infers abolishing commission in the mortgage and insurance markets, good disclosure, avoiding conflicts of interest and undue influence are important.
In addition, where there are thresholds to cover minimum fee levels in networks, platforms or support companies, firms need to be sure that these do not encourage bad practice, when advising the individual customer.
In addition to this, regulatory costs continue to mushroom, particularly as the Financial Services Compensation Scheme bill continues to escalate out of control.
In investments and insurance, we are seeing increasing defaults. As poor firms escape by exercising their limited liability status, they will have damaged good firms by competing unfairly, leave their advice costs with the FSCS and then often re-appear in the shape of a new firm to commence the cycle again.
The FSA has been getting better at fining firms for bad behaviour that has very often damaged their more responsible competitors, who will also have invested significantly in good compliance, systems and controls.
However, we have a government that now wants to grab the fines for its own purposes rather than allowing this to level off the costs being borne by these good and responsible firms.
These shifting sands present real challenges for the advice industry that has neither the profitability nor capital resources of the big banks or insurers.
However, intermediaries are being asked to absorb an increasing level of regulatory costs by a government which is desperate to bridge the savings gap and get the housing market moving. When it continues to starve the most trusted advisory elements of the industry, this is unlikely to deliver their desired outcomes.
The industry needs a new regulatory contract and a new body in the shape of the FCA, with consumer protection as their principal mantra, is unfortunately unlikely to deliver this.
A constructive, segregated market where advice is the norm and there is separation of roles is more likely to work. We have a few weeks to get a better deal from the Financial Service Bill, but my paranoia tells me this story may not have a happy ending.
Robert Sinclair is chief executive at the Association of Mortgage Intermediaries