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Heath spells out how to boost access to advice

Heath spells out how to boost access to advice

Even wealthy clients will not continue to accept increasing percentages of their fees going to bail out other consumers, the director general of new trade body Libertatem warns.

Garry Heath, director general of new trade body Libertatem, said 2016 is going to represent a T junction in the future of advice.

The Financial Advice Market Review will have received its responses before Christmas but Mr Heath said the lobbying for the review, which asks advisers what can be done to get more advisers in front of the general public, starts in 2016 and will last to the Budget and beyond.

Mr Heath said: “When FAMR was announced; commentators suggested that this would just be an excuse to allow banks to re-enter the market and some of FAMR’s questions support this view.

“FAMR could maintain the expensive status quo for existing advisers whilst exposing bank customers to a new round of overpriced products sold by over incentivized sales and call centre staff.

“We may see enthusiasm for robo-advice which may not deliver any real scale. What happened to simplified advice?

“If you want to tinker, take the line of least resistance, help the banks and networks whilst maintaining the current regulatory empires - Left is the way to go.

“But that will not deliver the main aim of the review to significantly increase the numbers receiving quality advice.”

Mr Heath said his view is that long term improvement requires long term change so we should not get excited about unproven robots or the market re-entry from already discredited distributors.

He said if the current costs of the Financial Services Compensation Scheme continue to expand at 60 per cent a year, the future of the sector is in real danger.

Mr Heath said: “Even wealthy clients will not continue to accept increasing percentages of their fees going to bail out other consumers or expanding the empires of unaccountable regulators. All markets face a period of price contraction and advisers have yet to see theirs.

“The real issue with FSCS is numbers. Historically advisers sector serviced 16m potential claimants. It now advises 6m funders – that is a big mismatch. The length of the scheme is the other problem.

“In its first year, the FSCS only has to deal with one year’s failed firms now it is dealing with all the failed firms from 1986.

“Libertatem believes that FAMR delivers an excellent opportunity for real change. The cost of FSCS must be charged against investments. That way all 16m clients will share the cost. But regulation needs total reform.”

On the FCA, Mr Heath said the regulator has an impossible job.

He said: “They cannot find the political will to properly police the bigger players who have increasingly abandoned their own moral compasses and reputations to play to the regulator’s whistle.

“In comparison, advisers present a very small risk to the public as their local reputation is paramount.

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