FECIF Secretary General
Do consumers and advisers finally have the same goals?
Over the last year or two it has struck me that the increasing complexity of regulation is not only being seen in a negative light by the financial advisory and intermediary market – there are also growing concerns being expressed by consumers and, in particular, consumer groups, that this is having a negative impact on the public at large.
Whilst it would be easy to conclude that more regulation means greater protection for consumers, this is often a misplaced belief and, arguably, lazy thinking. If regulation becomes excessive this tends to have a number of results: reduced availability to advice; greater end-cost; reduced access to any form of assistance for “lower value clients”; less product availability and options. Quite clearly, none of these outcomes are beneficial for consumers – or for anyone.
They are also highly likely to lead to a smaller advisory sector and a widening advice gap – just at the time when governments want consumers to take more responsibility for, and become increasingly engaged with, their own financial planning. If you don’t believe that this outcome is likely perhaps a quick glance at the UK post-RDR might change your thinking……
Don’t get me wrong, I am a very strong advocate for robust and relevant regulation that protects consumers in a sensible and appropriate manner. This is a necessity for the public and, ultimately, for the professionalism and image of the industry and, specifically, our sector.
I don’t necessarily think, however, that this always means more regulation – in fact, quite often, smarter more streamlined regulatory frameworks are significantly better for consumers in many ways. And those consumers, and the various bodies that represent them, are increasingly realising this fact.
Now is the time for our industry – particularly the advisory and intermediary sector – to work with consumers to help regulators devise systems that actually work, not least for the potential investor. The public needs simple, straightforward explanations of financial products and planning, and the relevance of them to their needs. They don’t need 40 page reports – Mr Regulator, please take note, virtually no-one reads that amount of information. Would you?
Product providers can also assist in this. Please, please, please stop making products unnecessarily complex and confusing to consumers - and sometimes to industry professionals too! Most people need a simple way to save for various events in the future and a means by which to protect themselves and their family if illness or death intervenes before they are able to amass that capital. It really shouldn’t be difficult to create products that achieve this in a straightforward and easy-to-understand manner, should it?
Trade and professional bodies need to work with consumer groups, and vice versa, to achieve this for the benefit of all stakeholders, whilst always ensuring that the client remains at the centre of the process. If we do this, perhaps regulators will start to listen……..if not, at least politicians might, as between us we represent a great many votes!