Sometimes you just have to make the best of a bad situation.
And so it is with the Financial Conduct Authority’s decision – after much hemming and hawing – to ban contingent charging.
Ultimately, this outcome was inevitable: even if the FCA had not acted, Frank Field, the chairman of the Work and Pensions Committee, said he would have brought forward legislation to introduce such a ban.
There are arguments in both directions when it comes to contingent charging: for the unscrupulous minority it probably does act as an incentive to transfer a client out of their defined benefit pension.
But contingent charging certainly helps those who cannot afford advice to access it.
The thing that did it for contingent charging in the end was the fact that the proportion of people being recommended to transfer out of their DB scheme was stubbornly high – higher than it should have been for an action which, most agree, should only be carried out in very few scenarios.
The important thing for advisers now is to make the most of this situation.
Complaining about these rules – as some advisers did for years about the Retail Distribution Review – is counterproductive and, ultimately, not a good look.
It is counterproductive because it gives the regulator an impression of a profession that will only put consumers first begrudgingly and at the behest of the FCA.
And it is not a good look because, frankly, no one in their right mind would hire someone to fix their boiler if they complained constantly about the safety precautions they had to take.
Will the ban be good or bad? We probably will not know for years. But advisers can make the best of it, as they have done with countless other, more fundamental, changes like the RDR and Mifid II.
damian.fantato@ft.com
