So what about the government’s recent announcement of a review of financial advice?
Some see it as yet another attempt of powerful vested interests to gain ground. Others, who perhaps look longer term, realise the current unaccountable regulatory structure is unsustainable and we must bring it under control.
Let us put this into perspective. This review comes as a direct result of the double whammy of the recent pension reforms which demanded an adviser establishment which no longer existed and RDR reforms which had ensured that 13,500 advisers were lost to consumers. The consequence meant advisers still left had halved the numbers of consumers they handled.
This appears to have surprised the Treasury, presumably someone was asleep at their desk. But this was not some unforeseen accident. It was an act of deliberate vandalism made by a regulator who was confident that no one would bring them to account if they pursued their “perfect market”.
There were two opportunities to put a stop to this. On 25 March 2010, the FSA board debated whether RDR should be pulled. It was not because they did not want to “lose face”. The second opportunity was when Martin Wheatley joined the FCA in 2011. He had an opportunity of burying this turkey but again refused to do so.
But there is another opportunity still to come. The plan to remove trail commission next year brings with it the expectancy of another cull. My numbers published in March 2015 (The Heath Report 2) believed between 22 per cent and 44 per cent of advisers are at risk. But whatever the numbers, another loss of advisers is something we can all do well without. We need advisers to pay those FSCS bills, at least in the short term.
Given this advice review, it seems premature to ban a commission when the review may well see the need to reintroduce it in some form.
Some of us requested that the trail commission ban should be postponed a year, this request now seems both timely and reasonable. Before I move onto the opportunities that this new review provides, please permit me the shortest toot on my own trumpet.
Last spring I had a meeting at the FCA and was told that it would be publishing a report in the autumn. I expected a hagiography extolling the beauty of their social engineering.
A handful of people with access to tiny resources took on a multi-million pound regulator and created The Heath Report 1 which postponed the FCA RDR report from September to December 2014. We then published the more heavily researched THR2 (The Heath Report 2) which has been used by policymakers all over the world.
Both reports have been used as ammunition by Treasury Select Committee members and while I would not claim that The Heath Report 2 created this new review it certainly brought the consequences of unaccountable regulation to the attention of politicians and policymakers.
