Massow anger misplaced, FCA trail stance is real issue

Gill Cardy

Ivan Massow’s financial advice firm, paymemy.com, focused on providing financial services to the gay community and was born out of the rabid fear and discrimination aroused by the discovery of HIV/Aids.

His business flourished at the same time as Fiona Price & Partners which was born out of the issues facing women attempting to interact with a very masculine financial services sector.

So I found the schadenfreude and vitriol unleashed by the demise of paymemy.com, born out of a market opportunity created by RDR, not merely unpleasant but extremely ill-placed.

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We face an advice gap. Many clients, not enough advisers and thousands of orphan clients thanks to the regulator’s wilful destruction of bank advice, direct sales and industrial branch markets. This means thousands of clients owning products and investments established with charges which incorporate ‘marketing allowances’ that are never distributed.

So the FCA goes kite flying. It was not forced to put it in the board minutes but it made public its concerns about legacy commission. Let me be clear: I disagree profoundly with this suggestion, proposal, hint, or whisper.

Nonetheless there is a right way to fight this battle and a wrong way.

Moving the goalposts now is grossly unfair to advisers who set up businesses on trail commission, whether many years ago or as part of more recent RDR changes, but this argument will not win hearts and minds.

For any adviser representation to be at all effective we must acknowledge the concerns of the regulator (and the more antagonistic elements of consumer press) and present our arguments in terms of the FCA’s statutory consumer protection objective.

Clients still pay for advice they do not receive. Worse, they may end up paying twice – once through product charges and again through adviser charging. This should concern everyone.

The focus on paymemy.com and its failure was in entirely the wrong place. It was not about whether clients want or need advice, nor whether advisers do nothing for income received, nor even whether the company needed regulating.

It should have been about why his business was necessary at all.

If I do not want advice, or have lost my adviser, why pay advised charges? More importantly, why let product providers keep the windfall profits of undistributed commission?

If this crazy idea gains momentum the real scandal will be the FCA failing, yet again, to protect consumers from greedy product providers. And that is a battle with a lot more people on our side.