To have a former regulator and architect of the pension review make these remarks puts the whole apparatus of regulation in a new unflattering light. Lord Lipsey should elaborate on these remarks as a matter of urgency. How long has he held these views and what proportion of people does he think lie?
We can only ask, what have advisers been paying for all these years? A system that was meant to increase confidence in financial services and to stop unnecessary recourse to the courts has been undermined. You cannot operate a system of regulation that allows large numbers of vexatious claims. It allows some people to benefit at a cost to others.
Advisers feel the heat more than most but the costs of unfair claims are passed around whether to policyholders, shareholders and other financial services consumers.
For too long, any criticism of the pension review was regarded as something that dared not speak its name. It did for Garry Heath’s IFA Association but now it has been criticised by one of its architects.
The pension review then helped inform the endowment review where advisers who could not prove they were right with detailed records were often found guilty. How many consumers were lying?
At the very least, these remarks should inform Lord Hunt’s review of the ombudsman and there is a relevance for any court challenges to the ombudsman’s jurisdiction.
It makes it all the more important that the FSA publishes the information it has over the firms which mispriced Lautro projections.
It also has massive relevance for the RDR. One question the FSA did not ask was whether the compensation scheme was not working because complaining consumers had the odds stacked in their favour. It should ask it as a matter of urgency.