And if there are several parties involved, all named in the tweet, you end up trying to make your point with an exclamation mark. I have got fairly good at avoiding those discussions, but occasionally I find myself being sucked in, like a few days ago for example. I really should stick to my social media policy.
The discussion was an interesting one, but to do it justice it needed more than 140 characters for a response to make any sense of it. It was the announcement by Foreign & Colonial to hit almost 6000 child trust funds with an administration charge of £30 a year.
Some advisers were up in arms, and I got the impression that those shouting ‘foul’ the loudest were advisers whose children would be hit by the charge. Others, me included, felt that this represented a business decision that fits with treating customers fairly and the retail distribution review. I am not saying this is right, but it nicely demonstrates the unintended consequences of all embracing legislation and regulation.
The real villains, if it really is villainous, are the government and the regulator. It was the government that pulled the rug from underneath CTFs by not allowing them to be converted or transferred into Junior Isas. And if having the rug pulled out from under your feet is not enough, the regulator is getting uppity about cross subsidies, so each F&C CTF is being asked to pay its own way. That might be an overly strict interpretation of the rules, but I do not blame F&C. Its decision is a commercial one driven by shareholders, regulation and a succession of governments that cannot leave retail financial services alone.
It may not appear fair to open a CTF to then find the goalposts moved just a couple of years later. But surely this cannot be different than members of the public who thought they had a financial adviser only to find themselves priced out of the market for advice. As RDR loomed closer we saw the introduction of minimum adviser fee levels, higher minimums for adviser assets under advice, and increasing focus on recurring income. Advisers who are now jumping up and down because their offspring’s CTF is hit with a charge might be a classic case of the ‘pot calling the kettle black’.
And let us not be under any doubt that this is restricted to F&C, as other companies with unprofitable business lines will quickly follow suit. We have witnessed banks pulling away from the advice market, advisers moving more and more upmarket, and now firms charging a minimum fee for unprofitable accounts. I bet this is not what the policy wonks had in mind when they came up with their grand plan.
