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 Jiří indelář
Former FECIF deputy chairman
Chairman of the Czech Association of Financial Advisers and Intermediaries (ČASF)
For the people!
The recently published European Commission statement on the Retail Investment Strategy (RIS) sparked relief among many financial professionals. The huge social engineering project of a ban on investment commissions was (mostly) thwarted and the Continental market will avoid the turmoil and consumer detriment arguably endured by UK citizens. But I am not going, today, to dive into what I believe to be the terrible experience in the UK of the Retail Distribution Review, Garry Heath is the prime expert on this, I guess. Instead, I would like to share a story from my home country, even my family; which is, I believe, quite illustrative in the current context as well.
The setting is late 1940s, just after the Second World War. As for most of Europe, my country was ravaged and, because of the Soviet army liberation, we fell into their “sphere of influence”. Naturally, support for communist party was high and in the last free elections of 1946, it won a majority of seats in the National Assembly. From the beginning, they worked on usurping power and, after the coup d’état in 1948, democratic parties were ousted and communists became absolute rulers. But, interestingly, this was not against the wishes of the population. Soviet credit, as war victors, was high and many citizens, even small businessmen, supported doing away with “big capitalists and collaborators” that started as soon as the war ended. Little did they know what was in store for them – communists spread programme of “protecting small business farmers” and so on.
After the coup, everything changed. The communist government immediately started a smear campaign against all private enterprises and especially farmers, blaming them for high food prices, unethical profit hoarding and speculation. See the similarity with current “high fees being paid by investors” narrative? Soon after turning people against entrepreneurs, a forcible campaign of nationalisation began and severe restrictions on those resisting were imposed. My great grandparents owned a small family farm in Western Bohemia and were immediately targeted – harassed by local communists and dubbed in local newspapers as “kulaks” and “peasant exploiters”. Ironically, my great grandfather supported the communist party before, seeing moderate socialism as the way to go. Early in the 1950s their farm was forcibly nationalised and after several months they were expelled altogether and had to move to a decrepit former watermill without basic housing properties. My grandfather then spent his young years working in a uranium mine and died even before I was born. I never had a chance to meet him.
In 1989, after almost forty years of a communist “paradise”, the regime was overthrown by the very “peasants and workers” it sought to protect, who wanted rid of the hated capitalism and a free market. We got our farm back – to find it completely devastated and unable to even sustain itself. Now, what is the moral of the story? We are obviously not in the 1950s and nationalisation is not on the table (yet). But there are many signs around the RIS project that bear similarity to the rhetoric back then. Consumer protection has become a twisted behemoth and prime motivator of social engineering attempts that are completely disconnected from reality and exhibit disturbing similarity with the narrative from half a century ago. Many fellow colleagues from Eastern Europe, observing this development, think it is a pity that some westerners did not go through the communist regime experience and enjoy its “benefits” themselves. Honestly, I think that several weeks in a communist paradise of no “useless fees and profits”, but full of government repression and general poverty, would cure Mairead McGuinness and Verena Ross of their populistic ambitions. And for the rest of us, let the story told above become a memento. A small, but urgent reminder that we should not allow that terrible history of stealthy nationalisation and detriment to the people happen again. Even if it is likably presented as “doing away with those bad advisers and their commissions”, because you can be sure about one thing. This time they go after advisers and you are silent. Who would then roar, when they come for you?
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