96% of IFAs say the Government should abide by TCF on personal accounts.
The latest straw poll posed on the BeeHive website asked IFAs to consider: "When distributing its proposed system of personal accounts through the process of auto-enrolment, should the Government adhere to the principle of treating customers fairly?"
On the face of it, this seems a silly question to ask but I asked it for a reason. Personal accounts are being built as trust-based occupational pension schemes and as such fall outside the FSA's conduct of business rules and will be regulated instead by The Pensions Regulator. As personal accounts are not the product of a regulated firm, adhering to TCF will not strictly be necessary. But that does not mean that ministers cannot apply the principle to what they are designing. That is an important point, I think, and one that the Personal Accounts Delivery Authority should take into account this summer while dotting the i's and crossing the t's on the whole issue of just how personal accounts will work in practice .
Once again, it was the comments that IFAs made when responding to the poll that were, to me at least, more interesting than the result of the poll itself. Unsurprisingly, the result of the poll was a resounding 96.2 per cent saying yes and 3.8 per cent saying no.
To start with one of the few people who voted no, I thought the reason given made a good point (and one that I do not disagree with): "I think it is too much to expect the Government to adhere to TCF but I do think they ought to make it clear that some people may not benefit by joining."
From those who voted yes, here is a representative selection of the comments made: "The Government should commit itself to the standards it imposes upon others, particularly where those standards are those that professionals in the industry would be following, even without the imposed guidelines." "Obviously, yes, but it reveals how wrong-headed the present thinking on this is." "In our firm, when considering TCF and the way we deal with clients, we ask ourselves a number of questions such as: 'Would you be proud if others found out about your actions?', 'Does this make me feel uncomfortable?' and 'How would it look on the news?' I guess our Government doesn't need to worry about things like that but it is very irritating and frustrating when you try to do your best for clients, only to have it undermined." "Of course they should. I believe it is absolutely right that we as an industry should live by TCF rules and as such any Government-sponsored initiative like personal accounts should be just as stringently policed. What I do find worrying is that the question needs to be asked at all." "The adviser community cannot be asked to do one thing and the Government in the same circumstances just ignore it." "It is a pity that the Government is not subject to the same rigorous rules and regulations that financial advisers have to adhere to." "Surely it is in the interests of every Government to be seen to be treating its citizens fairly? Anything other than following the principles of TCF by the Government would be construed as unfair and therefore questionable as to its suitability." "This is especially the case, as the majority of people to be enrolled into the system are likely to be unversed in financial matters."
Those comments are evidence of the widening gulf that that is opening up between those who have the benefit of financial advice and those who do not. It is not auto-enrolment we need if we want to get more people saving for the longer term, it is more financial advisers.
First published in Money Marketing, 30 August 2007