Mortgage Promotions: Dumb to link advice with pay

What is it about our regulators that once they hit a six-figure salary and non-contributory pension scheme they forget the needs of the ‘common-man’? I refer, of course, to the recent pronouncements regarding the meaning of ‘independent’ as far as advice goes.

Much of what has been said is sound. For instance, why anyone who is not giving ‘whole of market’ advice should be allowed to call themselves ‘independent’ beggars believe. In fact, in my book any attempt to do so would be a deliberate attempt to mislead consumers. You simply cannot allow anyone who sells a cut-down product range, whether that is a ‘tied’ agent or an appointed representative of a principal or even an independent financial adviser to present himself as ‘independent’.

I do not know if there is a definition or label for such groups of people, but I can think of some. Purporting to be what you are not, apart from not fitting in with the ethos of treating customers fairly, could potentially get the lawyers rubbing their hands together in glee and running to the bank with the proceeds of various actions.

It is clear that to be independent one has to give whole of market advice. However, what I cannot stomach is the linking of how a person is remunerated to their ability to call themselves independent. It is not relevant how customers pay for the advice they receive. It could be a fee, it could be they do not pay anything and the adviser receives commission from the product provider. It could even be that those receiving the advice barter and trade their services against the time the advice takes. None of that matters. What matters is that the cost of the advice is transparent and that the consumer has choice.

However, the issue that really raises my blood pressure is the arrogance displayed by those who can afford to pay for advice against those who cannot. Does it not occur to those who can amply afford to pay for their advice that there are others who cannot? Even worse, if the option of the adviser receiving product commission were not available these consumers would lose out.

Excluding customers from whole of market advice seems particularly dumb to me, as it will lead to a two-class society.

We already live in a society where a section of our community cannot benefit from banking services from normal clearing banks. Does our regulator really want to create another sub-community of people who cannot afford to pay for whole of market advice?

If this were allowed to happen, the net result is likely to be a sub-culture of uninsured people or people who only benefit from limited advice. So where would their first port of call be in times of hardship be? Yes, the benefit system. Therefore, because a pompous and dictatorial approach to paying for advice is proposed we create a problem for society and the welfare state. Hardly “joined up thinking”.

Even worse than such thinking is the fact that such comments were made to the chancellor’s High Level City Group. Let us hope our new chancellor hasn’t forgotten the roots of his political party.

There is a solution. Regulators need to understand the real world. Not everyone can afford to pay for advice (yes, I know they pay in the end through product commission), and product commission in the supply chain does not operate against the interests of the customer. A variety of payment systems for whole of market advice is in the interests of everyone.