There was a straight-forward objective sitting behind the work that resulted in the recent report presented at Gleneagles on simplified advice. The team was aware of the work on simple products and was keen to see a way to promote investments and a wider range of protection products than the suite proposed by the redoubtable Carol Sergeant.
As Carol’s recommended products are to be so simple as to avoid the need for any advice, the group felt there will remain a yawning gap between those and the products and advice likely to be available in the post-RDR advice world.
Whether on a restricted or independent basis, most offerings will be considered expensive to access, therefore needing sophisticated solutions.
Keeping in mind the work by Ron Sandler, the basic advice regime, Mifid in its current and future incarnations and the thoughts in IMD II and Prips, the group tried to work within the possible.
It is also important to frame this against the social issues of a pensions time-bomb, the recognised saving and protection gap and the loss of mass-market advice to middle income groups by the closure of the tied advice arms of most of the major banks.
I consider it crucial that the industry embraces and supports the current simple products proposals and also works to get an effective Money Advice Service that genuinely engages and impels consumers to take some action. These are 10-year programmes that we should not be deflected from. The industry needs to engage to shape the solution, not stand on the side-lines criticising.
In developing the basic advice plus concept, this was not an attempt to subvert the RDR. It is a genuine desire to provide a bridge between non-advised and the new QCF level four, fee only world. Commission will remain for protection and should be capable of being earned against approved transparent investment solutions.
This will be a very limited solution so a demarcation line from the benefits of a fee-based advice process needs to be tangible. Also as the “Plus” world would require a QCF level three competence, it raises the bar from the unqualified world of basic today, and provides a bridge to deliver the advisers of the future at the more senior level.
However it might also allow mortgage advisers who choose this route to provide more holistic solutions to a broader population.
They key to unlocking some of these potentials is an open mind. If we wait for our regulators to open doors for us then opportunity will evaporate. The industry must define what it sees as transparent and standardised products. It needs to evolve an approval scheme within its own control.
Perhaps we need to learn from what SHIP did for equity release. It then needs to persuade politicians and the machinery of government (the Treasury) that this is effective and workable. Badged products that compete on price and service, not on features or performance. Approved sales processes that level three qualified staff can use to deliver what the customer needs and wants.
Whether it be the Government, regulators or industry, we need to stop hiding behind Europe, the ombudsman or professional indemnity insurers and be brave enough to do what we all know is right for consumers and for the country. With that approach we may begin to get an industry that the public will begin trusting again.
Robert Sinclair is director of the Association of Mortgage Intermediaries