The Office of Fair Trading is very active in pursuing bad practices pertaining to that old regulatory chestnut consumer detriment. Its recent efforts have focused on insolvency practitioners, cash Isa transfers and bank charges – all in the name of consumer enfranchisement.
The RDR provisions have been the subject of numerous meetings between the OFT and the FSA (nine at the last count). We can assume that the OFT has been pacified regarding the consumer detriment which will arise as a result of the mass industry exodus and the removal of access to independent financial advice for millions of consumers.
Surely, it cannot just be me that considers the OFT inaction to be at odds with history? In 1995, it successfully removed the maximum commission agreement on the basis that it stunted competition, yet the removal of all commission, with identical implications for competition, seems to have received the green light. Of course, the OFT will not be drawn on its stance and simply states that discussions are ongoing.
Under part four of the Enterprise Act 2002, the OFT is able to refer a market to the Competition Commission for further investigation if it has reasonable grounds to suspect that one or more features of that market prevents or distorts competition.
Regrettably, this is where Catch 22 conveniently rears its head. The OFT advises that it cannot refer the RDR provisions as they are not yet a feature of the market. By 2013, when they are, it will be too late – irretrievable damage will have been done.
One of the OFT’s statutory functions is to advise public authorities on competition matters – including proposed changes – and I have been invited to provide it with evidence that the RDR proposals will have a significantly adverse effect on competition.
A letter from Mr Angry of Hemel Hempstead will have less of an impact than a torrent of replies so I invite concerned readers to write to Debbie Samosa, OFT, 2 Salisbury Square, London, EC4Y 8JX. Hundreds of disgruntled advisers regularly vent their spleen on the letter pages and online blogs, so make your views known to the people who can, and just might, shape events.
We are currently witnessing unparalleled consolidation within the provider world. International conglomerates have decided that the UK market is so price-competitive that profits can barely be eked out and that the UK is so over-regulated that their capital will be better invested in other climes.
Yet one more example of the RDR domino effect. Lower profits, higher outgoings, greater compliance, higher fines, restriction of trade, marginalised consumer access, etc.
What an astonishing landscape unfolds as we trek leaden-footed towards 2013. The Government, the Treasury, the FSA blinkered, yet in their own eyes infallible, forge ever onwards.
The similarities with Lehman Brothers in 2005 are clear for all to see. Blinded by potential and not fully understanding the markets they inhabited, the full impact of reckless decision-making only became apparent when it was too late to turn back.
Politicians and regulators have very short tenures and can always fall back on the “collective responsibility” alibi. The industry, once broken and destroyed, will take decades to recover, if ever.
Alan Lakey is partner at Highclere Financial Services and director of Adviser Alliance