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At a recent conference of IFAs, a poll was taken of the 600 delegates to find out how many of them believed their businesses would survive. Fifty per cent said they would need additional capital to withstand the impact of the Sandler and FSA proposals.

But what is it about these reports that is so damaging? The proposal to have more products with flat 1 per cent (or a little more) charging structures is vastly overplayed. Many products along these lines are already on the market so the products will not be particularly new and Sandler is not proposing that regulators dictate what charges and features a product can have or what commission the product provider pays.

Sandler could have gone much further. The US, for example, is fondly – and wrongly – regarded by some as a bastion of free market capitalism where regulation is sensibly kept to a minimum. You would not get these ridiculous regulations over there.

Wrong. In the US, regulators do not even allow life insurers to design their own products or to price them. Instead, as someone recently pointed out, they have a system of “rate and form” regulation. That means that both the rate – the premiums – and the form – the features of the product – have to be agreed and approved by the regulators before sale.

In fact, US regulation is so prescriptive it makes the European Commission look positively laissez faire. It was recently pointed out to me that in insurance regulation alone there are around 150 full-time regulators in the UK. In the US, there are over 10,000.

So is it the FSA&#39s proposals on the meaning of independence that are going to crush IFAs? Although surveys repeatedly show that the public prefer independent financial advice to other kinds of advice, it is not altogether clear that the public understand what it means.

Does it mean the IFA gets paid the same, no matter what the customer buys? No. Does it mean the IFA is not owned by a product provider so there is no undue influence? No. Will customers walk away from financial advisers if they are forced discreetly to remove the adjective from their business cards? Not if you have given them a good service.

Surely more damaging are the longer-term trends that have transformed financial advice from the lucrative business it once was to the struggle it can prove to be now.

Readers will know this area better than I do but these days it seems to have become more than ever before a simple question of where the money is coming from.

The sale of financial products took off in the 1980s for a number of specific reasons. One was that the Institute of Actuaries started to look more kindly on charging structures for financial products that allowed commission to be paid – and recouped – at the front end of the contract.

That meant product providers could afford to pay thousands of pounds in commission for selling products where the customer might only be saving £100 a month.

The second factor was the stockmarket. In the 1980s and 1990s, returns were such that it not only seemed a shame, but positively negligent, to shy away from investing in investment products.

And third, the Government laid on specific subsidies, such as extending tax breaks and contracting-out rebates to money-purchase pensions, which made products much more attractive (even if they cost the taxpayer billions).

These factors together meant more financial advisers than ever before were able to make a living selling low-ticket business to ordinary customers.

Now most of those factors have disappeared. With the advent of low-charging products, it is simply harder for IFAs to make a living because there are fewer products paying nice up-front commission. Other changes, such as the flatness of the stockmarket and the withdrawal of some of the tax breaks have also taken their toll. Regulations only play a small part here, in that it is harder for IFAs to justify selling a higher-charging product when a lower-charging one would do.

But have the last few years really been horribly bad for the financial services sector or is it that the 1980s and 1990s were extraordinarily good?

On the stockmarket, there is an increasingly vocal group which says this bear market is simply taking us back to the normal order of things after two decades of excess. The historic trend of price/earnings ratios suggests that far from being underpriced now, shares have been overpriced for a long time, perhaps since the mid-1980s.

The same can be said for the financial services sector. Far from having a hard time now, the sector just had an extraordinarily good time in the 1980s and 1990s. Financial advisers have enjoyed a two-decade-long party of booming stockmarkets, overly generous tax breaks and lucrative up-front commission. So don&#39t blame Sandler for the hangover.

Andrew Verity is a financial reporter at the BBC


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