The FSA has been busy recently from Sir Callum McCarthy warning us that the current pension distribution environment can’t go on, to the speech by Sarah Wilson on treating customers fairly at a recent conference.In the political party conference season, many journalists often comment on the number of times that a particular word or phrase appears during a speech. As I read the speech by Sarah Wilson on TCF, one word in particular jumped out at me from the page. No fewer than 55 times the word “product” was mentioned, yet the word “advice” only merited a single mention. This troubles me, as we seem to have a regulator who talks about suitability but focuses on products almost to the exclusion of advice as a topic, let alone a priority. This should be no surprise as it has taken several years to reach even draft definitions for generic advice. It seems to me that if we are to prevent the sale of unsuitable products then the best way forward to emphasis the benefits that flow from the holistic approach, and to move away from a product- centric approach. To regulate advice is no easy task and needs a rethink over how advisers can be encouraged to take the steps to develop their knowledge and or validate it to the chartered financial planner level. If we are to consolidate this separation of product and advice, then we need to ensure that the level and value of the advice is acceptable to the public at large. This idea of separating advice and execution is not new, Ron Sandler suggested it some time ago, but for it to succeed we need the ombudsman on board and I feel that until the Financial Ombudsman Service is under the aegis of the FSA, we will fail in any attempts to make low-cost advice available where it is needed most. Sir Callum McCarthy focused on the churning problems that were well aired in Ned Cazalet’s report earlier this year. Since then, Standard Life’s Trevor Matthews has suggested that net positions should be reported. In other words, if you receive 1m in premiums but lose 500,000 to transfers, then you should report net sales of 500,000. I would go further than that. If the transfers are internal, they should be reported as a transfer and new business and not just as new business as is currently is the case. We need to know just how much new money is coming into circulation. Without this information, we would not know if any real impact is being made on closing the savings gap. Cazalet’s report should have stopped the merry-go-round in the group market, but it did not, simply underlining the fact that, as long as commission is payable on transfers, etc, this churning will continue. The providers could stop it all tomorrow, perhaps by only paying commission where the terms are improved for the members, that is a reduction in the annual management charge to less than 1 per cent. When making speeches we have to remember that a reputation is easily damaged and that we all need to share the objective of getting as many people as possible to financial independence. Giving them the impression that all saving is futile needs to be avoid at all costs. Publishing transcripts and then putting them on general release may be good for the ego but does it really help the public, I think not.
The Zurich training centre in Swindon, where tens of thousands of people trained for careers in financial services with Allied Dunbar, is to be demolished and redeveloped as a four-star hotel. Many leading industry figures trained there, including Home of Choice chief executive Richard Coulson, while Positive Solutions executive chairman David Harrison and Thinc Destini […]
The stormy shores of Dorset were not the most inviting of places last week for anyone trying to wring financial services policy details out of David Cameron’s cuddly sunshine Tories.
Allianz Global Investors has made five funds designed for the pan-European market available to the UK retail market.The Allianz Global investors premier range will bring together the group’s best equity funds covering the key areas of Europe, US, Japan, and emerging markets.The fund range comprises three new funds and two rebrands that were previously only […]
Aegon Scottish Equitable says it has uncovered a loophole that enables people with deferred pensions to take two lots of tax-free cash. The loophole applies to policyholders who opted to take tax-free cash and defer taking the pension before July 27, 2004 but did not tell the scheme administrator or the trustee that they intended […]
Jelf Employee Benefits looks at some of the key considerations employers should think about when reviewing and choosing a flexible benefits provider. Choosing the right benefits for your employees is one thing but delivering a successful employee benefits strategy is about understanding the complete picture and delivering it in a personalised way so that it resonates with each and every individual in your business.
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