If a decision tree fell in a forest of criticism and there was no regulator there, would it still matter?
Now that we have the final version of the decision trees in their new pastel colours, what are we to make of them? Reac tion so far seems to have ranged from grudging acceptance to continuing hostility.
I find these to be strange responses to a document which I believe most prospective stakeholder investors will welcome.
There is something about the way we debate (at least, in public) anything new in financial services. If it is 90 per cent advantageous and 10 per cent risky, we will always concentrate on the risky part.
Why is it, as in the case of decision trees, we act as if we want everything to be 100 per cent perfect and, if it is not, we reject the entire concept? Civil engineering projects do not aim for 100 per cent safety so why should we seek this level in financial services?
The decision trees we now have are a vast improvement on the initial drafts but that is what you would expect after a consultation process.
Someone taking out a pension for the first time, espec ially a stakeholder pension which comes with a Govern ment seal of approval, might reasonably expect a neutral and respon sible organisation to produce a document which will help them understand what it is they are taking out and how it relates to any other forms of pension that they may have.
That is exactly what the decision trees do. There are introductory pages which deal with the general concepts which will be of interest to everyone. When it gets to the points relating to existing pension provision, the document rightly splits into three so that investors do not have to read the bits which do not apply to them.
I cannot see how any reasonable person can find fault with this approach. Although I sometimes wonder if it is the use of the flowcharts which confuses the thinking. The content of these pages could have been written out in normal prose format without losing anything other than, of course, comprehension. Per haps the critics would have been happier with that.
Others may be misled by their name – decision trees – and, here, I think the FSA should be criticised for allowing that name to continue to be used. Just because it had acquired a usage does not mean they had to carry it through to the final stages. The fact is they are not decision trees in the sense in which anyone who has des igned a computer programme or used decision trees in any other logical exercise would understand the term.
They do not lead the user to an answer. They lead the user to a course of action which should lead to an answer. The box indicating this course of action frequently makes reference to advice and, in the introductory notes, the last section (and as a result the bit that readers are most likely to retain) refers to getting advice.
With all these references to advice around, it is difficult to understand why some are still fearful that decision trees will turn out to be a substitute for advice?
Surely no one will argue with the wish that anyone taking out a pension should have a general understanding about what it is they have purchased, how adequate it will be and how it will relate to other forms of pension they may have, including state pensions.
To assist in achieving that understanding, the message should be presented in a way which a general reader will understand. It is particularly helpful to have something in writing which can be read at leisure and with no pressure.
Since product providers have generally failed to produce anything of this type, the FSA are to be congratulated for stepping in to fill the gap.