AMI Senior Policy Adviser Stacy Penn discusses the Perception Gap in the protection market, in this article originally published in Moneyfacts…
Having spent 2016 and 2017 working on the last fundamental review of the Financial Services Compensation Scheme it is fascinating to see investment advisers lobbying their MPs in droves as to its unfairness. I am not sure where they were during that review, other than Ken Davy of SimplyBiz who was very vocal in advocating a product levy.
The withdrawal of mortgage brokers writing protection business from the pensions class has increased the amount investment advisers pay, but this was deemed a fair change. I remain concerned that the investment community has not purged itself of its less able practitioners and whilst adviser charging was meant to remove conflicts of interest, the British Steel and unregulated investments debacles have left it exposed.
In addition, “The Times” assaults on SJP and Chase de Vere have done nothing to add to the image of the industry or sector. There appears limited appetite to call out bad and high-risk products and poor advice, with the professional bodies waiting for the FCA to act rather than taking a lead. The failure of the FCA to prevent now gives a £635m compensation bill which dwarves their own costs.
AMI remains interested in a product levy as a means of changing the funding approach, but having been involved in the last three major reviews of FSCS, Treasury has had little appetite. We would always counsel caution in politicians listening to one particular interest group, no matter how compelling their argument. Also bringing MPs into an industry issue also escalates our internal risks. The FCA needs to get a grip on a sector which RDR was meant to professionalise, but still seems to have fundamental issues.