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The custard clause

OK, I give up – where’s it hidden? I know it has to be in there someplace but I’ve had a good old rummage around and I can’t seem to find it anywhere.

I am of course referring to the obligatory FSA wind-up – the particular proposal in every consultation document that drives Her Majesty’s financial services industry into a frenzy but is ultimately absent from any final legislation, thereby evoking a feeling of, “Well, it’s not great but it could be worse because at least I don’t have to pour custard into my pants before giving investment advice.”

No, I’m pretty sure there was something like that in one of the many previous instalments in the great RDR saga – and, let’s face it, there have been so many I’ve almost certainly got the law of averages on my side.

But still, as I say, I’ve had a good rummage around in Consultation Paper 09/18*** – nope, I’m afraid I’ve no idea if that’s a rating and whether it’s out of a possible five stars – and I couldn’t find a custard clause or indeed anything terribly inflammatory.

Not, at any rate, to the independent advice sector. Sure, costs of £430m plus £40m a year on top isn’t exactly going to be found down the back of the sofa but, by many accounts, those figures represent an underestimation. So, yes, that’s a wind-up – it’s just not one that is likely to provide any pleasant surprises further down the line.

Then there’s the question of how many advisers will be driven out of the industry as a result of the need to change business models or take more exams and, as it happens, I do believe the sector will indeed be decimated.

Mind you, that’s not because I have any desire to be controversial but because I am a colossal pedant and “decimation” technically involves the demise of one in every 10 of something.

As things stand, I don’t feel particularly inclined to bet against that as a figure, partly because the FSA has been kind enough to work in a couple of years’ notice in all this, but mainly because people – and, y’know, IFAs are, like, people – have an extra-ordinary survival instinct.

However, the real custard clause is not going to wind up independent advisers but the banks, life offices and anyone else whose sales teams will have to wear the description “restricted” with the sort of casual insouciance I fear would be beyond me.

“Restricted” is rarely a good adjective, and the jolly greeting of “Hello, my name’s Julian and I’ll be your restricted adviser for the day”, will probably engender one of only a handful of responses – my prospective client is likely to question my IQ, my criminal past or my suitability to be left alone with pets or sharp objects. Possibly all three.

No, there are a few plot twists left for the RDR yet, which is as good a time as any to mention my admittedly rather mean-spirited theory that the history of financial advice in the UK boils down to who owns the best lobbyists.

Thus, back in the 1990s, when polarisation didn’t turn out quite as the banks and life offices had hoped – apparently punters set some store by this irritating concept of independence – and the IFA channel was proving more than a match for its tied counterpart, the not-so-independents reached for the nearest lobbyist and, in due course, depolarisation was born.

With it came the curious idea of the multi-tied adviser but, if memory serves, surveys found more than four-fifths of advisers looking to remain independent and so it was back to the drawing board for the banks and life offices as they searched for a new way to edge advisers out of the sales process.

Appropriately enough, as we’re in Wimbledon fortnight, the ball has been flying back and forth between the two parties throughout this consultation rally – with the umpire fortunately ruling the idea of “assisted purchase” to be unsportsmanlike behaviour – and as we near the end of the game, it seems to be “advantage independence’. Still, it’s only a matter of time before the cry rings out, “New balls, please”.

Julian Marr is editorial director of


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