Cicero Policy Briefer

Issue 24, May 2008

Back to the Future

By Iain Anderson

In 1985 Hollywood released Back to the Future—and Marty McFly’s escapades seem strangely relevant today.

For it was also during 1985 that the then Conservative administration was focused on the start of the passage of the Financial Services Act 1986, whose provisions were to create polarisation.

Polarisation—the clear differentiation between tied and independent advisers—survived until the end of 2004, when the regulatory regime allowed the blurring of tied relationships and the creation of a multi tied regime. The FSA’s DP07/01, proposing yet another new advice regime, was met with a cacophony of varying views which looked set to create an even more blurred retail regulatory landscape.

Yet in the publication of the FSA’s interim report on the Retail Distribution Review, a remarkable clarity has emerged. The desire to clearly delineate ‘advice’ and ‘sales’ must be seen as a victory for parts of the current intermediary community who are determined to offer real advice for their clients. It must also be seen as a victory for all those involved in the training and competence debate who see the RDR as a mechanism to raise standards.

As the FSA itself points out, there are still many potential obstacles towards creating a simpler retail distribution regime—not least designating the part of the current ‘sales’ regime which might

legally be construed as advice.

However, I can’t help but feel that the FSA has decided that a polarised distribution regime really is the best way of ensuring consumers understand the difference between sales and advice.

It’s back to the future, it seems. Great Scott!

Read Cicero’s full analysis of the FSA Retail Distribution Review

Iain Anderson can be contacted on +44 (0)20 7665 9532 or click here to email.