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Why CP121 is no laughing matter

One of my favourite Morecambe & Wise shows involved conductor Andre Previn, where Eric Morecambe was the pianist.

I was reminded of this as I finished my response to CP121. On this occasion, the FSA has eagerly embraced new technology by allowing submissions using a form on its website.

This is all very well but it does lead to a lack of expression and the discouragement of ideas out of left field or in raising relevant issues not covered by the questions or CP121 itself.

It is primarily the logistical nightmare of achieving clarity of status under the proposed market shape to which we must bring maximum focus.

The second stage of response to CP121 about the lower tier of advice will bring to the fore the Consumers&#39 Association&#39s ultimate objective, which is not, I believe, to defend the IFA at all costs but to secure low-cost, high-liability advice.

To achieve its goal of lowcost advice involves more than regulation and market shape but it must also consider the other parts which conspire to add complexity.

To suggest that tree walkers can solve all the problems ignores the fact that professional advice costs money as those dispensing it need to be professionally qualified.

Perhaps this is the nub of the problem, for as long as the benchmark for advice is FPC we cannot relax as this low level allows others to suggest that professional advice is not that difficult a skill to obtain.

Indeed, it is these practicalities in operating the proposed market which should have been the focus of the IFA lobby, not the defence of a less than robust system. Sticking to defending the status quo is simply playing a repetitive tune. Perhaps the inspiration for this strategy came from the other Status Quo.

In the same vein, many who currently champion the status quo must be ready to repent as many of them will rapidly move to AFA status if the lobby fails. Ever since the OFT reviewed polarisation, it has been clear that change will occur.

The abuses under the current regime have not helped the cause of the professional IFA, for example, where some IFA networks have collectively charged the providers a substantial amount just to attend their national conference.

This is unacceptable as it is likely to lead to a bias in product selection.

One national firm even sought payment for providers to meet with their executives. These payments cannot be made in isolation and they do affect others.

If you need to find evidence of this, can I point you in the direction of the providers&#39 free-asset ratios, which have declined significantly over the last few years.

These inducements do nothing to help the cause of the professional IFA and many network members must wonder when they will be informed of their loss of status as the network owners negotiate a move to multi-ties. I believe that when the dust finally settles, many of those who believe they hold all the cards will awake to wonder just where their financial advantage has gone.

But back to Eric, Ern and Andre, when Previn tells Eric he is playing a piece of music incorrectly, Eric says he is not, he is playing the correct notes but not necessarily in the right order.

Given the volume of comments citing the lack of logical argument behind some of the proposals in CP121, perhaps Eric would have said to the regulator that “they had the correct ideas but had not put them together in the right order” while playfully slapping both its cheeks.


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