As to be expected, those towering intellects in Parliament and particularly those in the Treasury select committee have yet again opened their mouths before their brains were fully engaged.
Intermediaries have often waived some or all initial commission and taken trail commission instead to lessen the initial impact on the client.
I am no lawyer but I would have thought there was some sort of contractual obligation, as commission has been disclosed and the product advised on in the full knowledge that trail would be paid, with the client's agreement. If this is now reneged on, how does that leave the contract?
Even if existing contracts are left as they are and future trail is curtailed, have they not applied their apparently underused cranial cavities to wondering why trail started in the first place?
Trail is something that began extensively in the 1980s and was a way to prove flexibility of remuneration and, where appropriate, dare I say it, a restraint on churning.
It was also an encouragement both to advisers and consumers not to make knee-jerk reactions and to take a longer-term view where investments were concerned – to the benefit of both parties, one would have thought.
Not only do these deep thinkers consider that trail is unjustified, they also do not like the levels of up-front commission and want to intervene in the free market yet further, while at the same time bemoaning the fact that the savings ratio is declining.
Before Government interference, there was a maximum commission agreement and the commission paid for collective investments such as unit trusts was 3 per cent, as it is today. Presumably, they expect us to work for free.
Research into consumer attitudes seems to be conducted merely to verify their preconceived ideas. Given the fact that this Government has done more than any other group to destroy confidence in savings, perhaps it should turn its attention more to that avenue rather than make passing remarks about Isas.
Finally, its own Frankenstein creation is now deemed to be not sufficient to regulate and control the sector and it now wants our trade bodies to lend a hand. May I remind the Government that it was the one that decided that self-regulation was not satisfactory.
Does it realise that joining a trade body such as Aifa is not compulsory and therefore those that do not sign up will not have to comply with the code of conduct? Has it bent its mind to working out how this code of conduct will be enforced and implemented? Additional cost, no doubt.
We can do without these bright ideas. Both the LIA and Sofa have a code of ethics. What makes the Government feel that the great bulk of Aifa members are not also members of either one or the other of these two organisations?
Perhaps when we are in the position of having a Treasury select committee that is made up of people with experience of money and finance and not composed of ex-trade unionists and teachers whose expertise in the field is questionable (and that is being polite), then we might actually get some proposals that will fly. The most effective of these would be a long period of silence.
Until that time, it would seem that those of us in the industry will have to be continually irritated by those whose grasp of the subject is a long way short of what it needs to be.