Being an intermediary is, by its nature, an uncomfortable place to be positioned. Bringing together supply and demand at the right time, at the right price and to all parties’ satisfaction can take a lot of juggling.
We are often cast as the whipping boy or the saviour, depending upon the climate or our customers’ needs at the time, whether they are the supplier or buyer.
Much like Aifa director general Chris Cummings, I laughed at Michael Coogan’s opinion that it was “our” fault that increasing numbers of loans are falling into delinquency. It was his members that came up with the products and the pricing and it was his members that asked us to sell them.
I would liken it to the Government blaming all shopkeepers who sell calorific chocolates bars for the increase in child obesity.
I am not playing the poor me card, I am stating the regrettable truth that we intermediaries appear to be increasingly seen as the thorn in the side of the FSA and the necessary evil to many providers. I would welcome being proved wrong.
We were only able to sell, and were encouraged to sell, products that at the time the lenders, the rating agencies, the investment banks and the various regulators and trade bodies were all satisfied with being in the marketplace and, bearing in mind the majority of business was written by us, it is not surprising this is reflected in the findings of the FSA.
I am not defending all of us. There were – and there remain – many in the market that should not be, those that focused on commission revenue rather than customer satisfaction, for example.
We all had a role to play in the outcome that we see today and focus should be made on improving products, encouraging innovation and increasing access to advice. Which brings me to one of the longest standing arguments – to charge a fee or not to fee-charge.
Since 2005, the Government has worked hard on financial inclusion and the opening statement on its website says: “Many people, particularly those living on low incomes, cannot access mainstream financial products such as bank accounts and low-cost loans”.
Why is this? There is certainly no shortage of impartial information. Googling “money” just a moment ago, I had 947 million results. Add “advice” and it drops by a mere 40 million. In fact, the FSA set up Money Made Clear and it sets out its stall very quickly on its home page. It says: “When it comes to money, our impartial information and tools can help you work out what’s right for you.”
But no matter how much research the public undertake, the vast majority want the reassurance that what they believe they need is correct, and for that they need an adviser.
To use one of my favourite quotes: “Knowledge is knowing a tomato is a fruit, wisdom is knowing not to put it in a fruit cocktail.”
I am involved in a business that provides financial services for the affordable house sector, the very people that the financial inclusion taskforce say need it. It is a requirement of the organisation we deal with that we do not charge for this advice. After all, by the nature of this sector, the clients do not have a lot of money. So, if we are to cease to be paid by our providers and we are not allowed and indeed our target audience is unable to pay, how do we fund the service so I can pay myself and my staff?
Well, we could direct everyone to impartial information websites, where they can read as much information as they could possibly want regarding money. They could then wander through the high street, search online or call one of the many lenders direct and, in most cases, receive a non-advised service. Does that sound like financial inclusion? Not to me.
I am aware that I have used the term “sales” rather than “advice” throughout this article. I see the two as different but it appears that the FSA thinks you can only do one or the other.
But without the promotion of my company and the service and products available, how would potential customers know to talk to me and receive the advice that I can offer?
We sell our business, we promote the products and services we have on offer but we also provide advice.
We absolutely tell people what they should do and the driver for that is based upon what they tell us of their needs, goals and circumstances.
We then advise them on the most suitable solution and sometimes that carries a larger than normal commission payment. However, the commission payment is disclosed and I have yet to meet a customer who objects.
Sales is not a dirty word and I do not see a successful financial services industry, accessible by all, based solely on a fee-charging proposition.