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Editorial - June 2015

Garry HeathGarry Heath
Director General Libertatem

Garry Heath announced the launch of Libertatem last month, a new trade association set up to represent all types of financial advisers based in the UK. His thoughts and plans are outlined below – they have great relevance to the rest of Europe.

Over the last decade the industry has lost sight of why access to impartial advice is so important to consumers. Instead we have become supine and apologetic for our own existence. We believe now is the time for a new trade association to bring a more positive future for both advisers and consumers by promoting how much social benefit the independent sector creates.

The timing could not be better. The UK General Election has given us a majority Conservative government, so for the first time in 5 years we have a golden opportunity to return accountability to regulation, to cut its costs and its intrusiveness and to ensure that the maximum number of advisers are available to our fellow citizens.

The Government expended much of its election rhetoric on deregulation. It is now time for rhetoric to become action. There are no more excuses.

Many MPs are very concerned about the destructiveness and cost of regulation as well as its lack of accountability to Parliament. Libertatem will be encouraging its members to meet their MPs and canvass their support for change.  Regulators’ costs have risen significantly - the FCA’s budget has increased ten-fold since 1999!

One of our early targets will be Trail Commission. The Heath Report indicated that the removal of legacy trail commission in 2016 would create a further loss of advisers in the industry, between 20% and 40%!  A further survey by Panacea indicated even larger losses than that. Either way existing consumers simply cannot be abandoned without servicing or access to further advice so that regulators can hide their blushes and complete their social experiment.

Proper regulation is vital but it must be proportionate. RDR claimed it would save consumers £223m pa. RDR is costing consumers in excess of £340m and even the FCA’s own consultants could find no evidence of consumer benefit.

As importantly, RDR allowed the regulator to insert itself between the adviser and the client. Once that is accepted how long will it be before this unaccountable regulator seeks to control the level of fees? They already have plans to change how they are expressed.

Historically 16m consumers were able to access advice when they needed it and pay for it over time. RDR has risked killing off access to advice for ‘Middle England’. We need to find a new solution for the mass market.

At a time when individual responsibility for personal financial well-being is growing, and Pension Freedoms have been introduced, the role of advice is more important than ever to the financial future of millions of consumers. We need more advisers advising a wider range of clients.

Instead we face losing more and creating a spiral of decline in which the costs of regulation and compensation are visited on far fewer firms.

We want to bring focus back to the industry and clear representation. Libertatem has a strong, experienced team behind it, and it is our role, as representatives of the industry and as agents of the client, to be proactive and work with regulators and the government to come up with solutions.

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