I have to say I am not surprised. When CP 121 emerged and we saw the end of polarisation, I was as convinced then as I am now that this was a step that would be regretted.
It seems such a pity that often we lose sight of the fact that the simplest solution is often the best, especially when it comes to consumer understanding and trust.
As we created single ties, multi-ties, broad ranges of insurers, open market, etc, we removed the clarity we had spent so much time to build.
There is little doubt that the bancassurance lobby deserve a voice as they struggle to bring products to clients at a cost that enables them to make a profit.
The sometimes burdensome compliance regime of trying to fit the sale of products into a true advice process means costs become prohibitive, hence the attrition of advisers over the years.
I would have thought that bancassurers would welcome a simplified world where products could be sold for what they are without having to justify them against alternatives.
A building society manager I know very well – my wife – tells me “You can purchase an Isa any day you wish in my branch as long as it is a Tuesday, as that is the only day the authorised person who covers my area is in my branch, so unpopular has the role become of the endless paperwork and supervision”.
As an IFA, I am sure many other advisers will associate with the view that the more products that are sold in the market the greater the need for advice at a later point. We have all had the client with the shoebox of policy documents that they need someone to make sense of.
A simplified regime where sales of products are clear and advice that ensures any product, if any, that is arranged is suitable must be the way ahead surely?
Recent consumer research conducted by Aifa and YouGov revealed that 81 per cent of nearly 2,500 adults consulted believed that if they were told whether they were being advised or sold a product, this would increase their trust.
Also very interestingly, 60 per cent were perfectly happy to accept a product sale only. The FSA interim RDR report seems to me to put forward a true win-win for all. A win for consumers as they learn to trust retail financial services and have a clear choice. A win for advisers as they act for the client and will choose from an open market. A win for salespeople who currently have unnecessarily complex supervisory procedures that get in the way of customers accessing the service. A win for the regulators who will have a simpler industry to supervise, and return to the basic principles of their remit, that is, to build trust from consumers. Finally, a win for the bancassurers who, I believe, will see an increase in sales and a reduction in costs.
Ian Thorneycroft is managing director of SimplyBiz