Last week, I made some suggestions on how a new association might look. This week I want to take us into policymaking.
My first point is that anyone can suggest policy. Policymaking is not restricted to government or regulators. Nor should it be. In the past three decades there have been two profound changes in the body politic.
First, if you were a prime minister in the 1980s, your Cabinet would consist of members with a wide range of backgrounds, including people with commercial experience. Now the table would be full of ex-Spads who have little life experience outside SW1.
Second, your Cabinet would be served by a civil service that was fiercely apolitical. It was driven only to convert policies into actions.
While the mandarins were always ambitious to grow their departments, they never signed up to any party political view.
New Labour changed all that, particularly at the Treasury, where promotion was heavily dependent on political acceptability.
Given that IFAs have both the industry knowledge and are agents of the client, maybe they are best placed to make policy. More importantly, by suggesting policy, we are improving the quality of the discussion and demanding that regulators and politicians explain why our policies are inferior to theirs.
Let us look at the biggest policy failure – the retail distribution review – and see if advisers can improve it. It is now clear that in their desire to remove commission, the regulators have removed advice from the 16m consumers and removed employment from 25,000 people.
Thanks to the Fos there is never going to be simplified advice, so we need to either rethink restricted advice or find another label for the mass market advice.
The Heath Report tells us that the mass market is more driven by transactions than by continuous advice.
We know many of those transactions happen at times of stretched cash flows, so payment needs to spread as in commission. So if we unite all those factors we have the makings of a mass-market offering.
The regulator wishes us to believe that commission creates provider bias, so let us fix the rate nationally as we did under the former life insurance regulator Lautro. We may need to square it with the Comp-etition and Markets Authority, but the world has moved on a lot since it was last consulted. It should be a fixed price for a fixed job – the quality of advice would be the same as fee-based, but limited to mainstream products from within the regulated arena.
It needs detail, but at least we are doing something.
Garry Heath is editor of the Heath Report
