I am frankly fed up listening to the same old motley crew of negative, whinging product providers and IFAs knocking Sandler and the simplification of stakeholder products.
They are like fat cats guarding their own pots of extra double cream.
Unless they have something positive to contribute, they should keep quiet. No one – least of all the Treasury – likes negative people.
For years, IFAs have complained about the overly bur-eaucratic process for writing business – the generation of endless paper mountains, the millions of pounds paid in compensation following the pension and FSAVC reviews, the cost of professional indemnity insurance and the lack of new blood coming into the industry.
So what happens? Unbelievably, the Treasury listens, commissions Sandler and provides the means for a simplified sales process using decision trees with much less liability.
It will produce a sales process which the FSA's own research shows the consumer relates to and one in which you do not need FPC and various parts of the AFPC to undertake.
The products are excellent and the commission is not unreasonable, considering the reduction in liability and time spent selling and administering products.
Despite this, the industry moans and pleads to increase the charge cap. As a result, the Treasury once again listens and increases the charge cap by a colossal and unexpected 50 per cent to 1.5 per cent, albeit for the first 10 years of a policy.
You would have thought that the industry would be ecstatic. But no. Sitting in ivory towers with fat salaries and ego-boosting expense accounts, much of the industry moans further and harks back to the days of inflexible products with high upfront charges.
Have they learnt nothing from the lessons of the past? Product providers and IFAs need to get to grips with their colossal overheads and expenses and become leaner and more efficient. If they fail to do so, it has to be hoped that a new breed of product provider will emerge to threaten their supremacy.
Well, I welcome the Treasury's announcement. They have clearly listened and understood the issues.
I was at a sales conference recently attended by a number of managers from differing retail industries ranging from cars to double-glazing and conservatories. One of the heads of these companies comm-ented that his IFA had told him that there was “no money to be made in selling stakeholder pensions”.
I asked him how much he thought it was reasonable to earn in commission from a £200 a month gross premium stakeholder pension sale. I told him that recent FSA research had shown that the new simplified sales process takes an average of 36 minutes from start to finish and I reminded him that the client would get tax relief on the contributions.
He was absolutely flabbergasted when I told him that the IFA would earn as much as £840 in initial up-front commission. He compared this with his own industry, where the sales process would be much more drawn out, often taking three to four hours, and where the commission rec-eived on a £4,500 transaction would be a maximum of £400.
This £840 was the commission payable under the 1 per cent charge cap. Not bad for 36 minutes in front of a client.
Who are these whingers? Clearly, no real friends of the consumer, competition or the free market. On the IFA side, they are largely represented by people who relish hiding behind so-called “adviser” status and bamboozling clients with complexities. Despite their IFA status, they end up selling a dodgy product with higher charges, or at least the scope for higher charges in the future, and less flexibility than a stakeholder pension.
They even have the aud-acity to call them stakeholder-friendly. Well, if they are so friendly, why aren't they stakeholders? The only people they are friendly to are the product providers and the IFAs running amok on RU46.
Make no mistake, they do so purely for higher commission – greed has overcome their asylum. They have clearly learnt nothing from the lessons of the past and I for one hope that eventually they get their comeuppance and get seen for what they truly are.
Bring on these new Treasury products, bring on simplification and transparency, and let the competition begin. Long-term business can only be successful by championing the interests of the consumer.
Jon Pardoe is chairman and chief executive of Berkeley Morgan