19th August 2015

Is Adviser Representation Guaranteed?

Now people are beginning to notice Libertatem, we are now seeing the development of sales objections to joining – one of which is “what guarantees can you give me it is going to work?”

After the last 15 years of supine adviser representation, that is a very fair question.

Those of us who were active in the 90s; remember that we were able to fight off some very real attempts to use regulation to remove the smaller player from industry. We had attempts to create a fee only advisory sector and multiple attempts to remove polarisation and create a fog around status so that tied agents could pretend to be independent. We defeated them all and at the same time reminded regulators that any expansion would face a sea of opposition both us, Parliament and the media – all of which they feared.

Since I left representation in 1999; costs have increase 6 fold and FOS and FSCS are out of control. Why? Because the current regime has nothing to fear. They face no opposition and are accountable to no one. But to know this you have to have been in the industry 20 plus years.

Those who arrived in the new millennium simply do not know a time when representation was successful. Libertatem has a huge marketing job to do on this group.

To misquote George Washington we all meet “On the battlefield of ideas”. In a democracy; we put our case for change to the public, media, the executive and backbench MPs with as much skill and clarity as we can muster and hopefully we get some of what we ask for. The result may, by design, be a compromise and therefore not guaranteed. But the battle itself must be pursued single mindedly and to a plan.

The most important point is that the battlefield of ideas is a public place in which your ideas are judged by the combined wisdom of many under the strong sunlight of reason. The Government Advice Review announced this week is the declaration of the opening of a new battlefield.

It will go one of 2 ways:

If the Treasury bureaucrats have their way, the Review will have be very inward looking and will avoid the prime issue of accountability. An unaccountable regulatory system is priceless for Treasury mandarins in search of a vehicle to bury their mistakes. We must ensure that this Government Review doesn’t become a smoke-filled room in which vested interests are traded. This will give the Treasury a real problem as they almost invented the smoke filled room.

The Treasury is a creature of the shadows and whilst the Chancellor may have announced a wide ranging review, his mandarins will be desperate to restrict it and ensure no embarrassing stones are revealed. Their default position is defend big business especially the banks. They hate being dragged into the light, receiving parliamentary scrutiny or any media attention. We must make that happen by encouraging public debate and we must stop the Treasury circling the wagons and listening only to like-thinkers.

Some commentators have suggested that this Review is primarily to allow banks back into the advice game. If we fail to unite that is almost certainly going to be outcome and we will become the recipients of another kicking.

However if we unite and assemble our troops properly; the Review can be widened to include all voices. We can look at the current regime and see where it has removed access to advice from the public. We need to canvass backbench MPs, the Treasury Select Committee and consumer interests. A well run and clear campaign represents the best chance we have had for 20 years to reform regulation and to expand the importance, scale and profitability of our sector.

This is the positive side: there are many in Parliament willing to fight with us to create accountability. They see this not only as a regulatory issue but also an affront to democracy. In particular, the Treasury Select Committee is very keen to bring accountability to the regime and wishes to promote primary legislation to achieve it. Baroness Altman, the Pensions Minister is very critical about the current regime and Department for Business Innovation & Skills wants to see de-regulation and has created the Enterprise Bill to achieve it. So we are not without friends but these friends need encouragement.

This is not an ethereal issue: the outcome of this Review will govern our lives for the next 20 years – so we must win.

Over this summer we need to decide our shopping list for this review, create our briefing notes and start to promoting our views; primarily to MPs but also to the TSC, media and consumer bodies. These big scale reviews play to an adviser’s talents. The adviser’s prime skill is to take complex concepts and drill them down to simple understandable advice. This is a dream skill for lobbying MPs who generally have a short attention span and don’t do detail.

Top of our list will be accountability. If we are to expand advice; we need to have a stable environment in which our businesses can develop. This requires certainty - the very thing we do not have with this unaccountable regime. If Government wants more advice we must have certainty and an accountable regime.

So if I can’t offer positive guarantees - what can I offer - if advisers do not unite and support Libertatem ….

• I can guarantee; that others will use the Government’s Advice Review to expand regulation and ensure that the sector will continue to be marginalised, corralled into the labour intensive areas of advice and remain the blame hound for other distributions with a better grip on the levers of power.
• I can guarantee that if adviser representation remains the same; your voice will continue to apologise for its existence, will continue to play the establishment game and will continue to lose. Its control will continue to be vested in network bosses who will wish 100% of the influence for 50% of the spend required. I can also guarantee that behind the scenes the ABI will continue seek to influence the representation of advisers.
• I can guarantee that regulation will seek to control your fees, FOS will continue to promote the compensation culture and make bizarre decisions and as a result the FSCS will continue to send out huge bills.

So you still want guarantees?

Now is decision time: What do you want serfdom or unity?

Fail to unite and you are creating a self-fulfilling prophecy. No unity and the next 20 years will decided by others. More of the same or worse for the next 20 years – guaranteed!

Advisers have a real chance of making their views heard but only if they stop thinking like hostages and emerge from their Stockholm cells, unite and fight. Candidly we cannot wait while advisers take the next 18 months to scratch their collective bottoms and ponder. The Review has already started and we need to take part now.

I return to the second part of George Washington’s quotation “On the battlefield of ideas - winning requires moving toward the sound of the guns”.  So are you ready to move to the sound of the guns?

If so join Libertatem today. Give us the funds and influence so we can give you the ammunition and whilst victory is not guaranteed we have a very good chance of it! 

Garry Heath www.libertatem.org.uk/join

Business Development, Regulation