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The easy option

Right then, something pithy to round up 2008. How about Chris Cummings’ response to the RDR conference I sat through online late in November?

But I will start by saying what a fantastic method this was of “attending” the RDR conference. This is a refreshing innovation that gets my vote.

Anyway, back to Chris’s reaction. I sat there listening in morbid fascination at the various FSA speakers delivering their faltering message of a brave new world.

I sat agog when the four panellists started to give their reactions and held my breath when Chris was finally asked to respond. I was not disappointed. After the cloying and subservient reactions from the other three panellists, Dan Waters, Stephen Haddrill and Angela Knight, Chris fired back a volley of pragmatic realism.

Clearly, he feels that we have been trampled on again and I would not disagree. He is spot on when he suggests that we have been unfairly singled out for “special treatment”.

It means that banks will have an easier environment in which to make large volume sales with less quality.

Why is it assumed that a fee-only model is better quality? This deluded notion rubs me up the wrong way. A crooked adviser will find it just as easy, perhaps even easier, to over-charge using fees than to get “enhanced” commission.

You only have to look at some of the more supposed upmarket “wealth management” offerings from the banks and other fee-only IFA offerings to see that this is a misunderstanding of the real world.

We should be keeping closer tabs on what people do – look at their actions, not the results. Principle-based rules in isolation intuitively feel wrong.

We need to be stepping in when something looks or feels wrong, not mopping up the mess afterwards. Excessive commission rates are a good example of seriously flawed business activities that are allowed to go unchallenged under the noses of the regulators. Dodgy ads for “cheap” life insurance with free gifts is another. Open market option abuse is another.

I hate to repeat something I have already written in the past but it deserves repetition. If you make people’s lives so utterly miserable by increasing their costs (however that manifests itself), they are more likely to stray off the straight and narrow.

Make the life of an adviser easier and they will be more inclined to do a good and ethical job. The RDR just feels as though our lives are going to get harder. We all want to be better but making us jump through expensive hoops is not the way.

As I have said many times before, I have a lot of sympathy for the FSA but if we start with the premise that the FSA has an unpleasant and impossible mission, why not do away with regulators completely?

Instead, let us have some kind of self-insured investor protection fund (a bit like the PPF?) that we all pay into and protect consumers that way while at the same time embracing good old- fashioned education, caveat emptor, common sense and rugged rules? If you think it sounds stupid, it is not half as daft as the state we are in now – a single regulator trying to pro- tect everyone from everything and achieving the opposite.

Tom Kean is director of Thameside


FSA aren’t qualified to judge us

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Qwerty dancing

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