FCA chief executive Martin Wheatley says he is concerned that bias still exists under certain RDR adviser charging structures, particularly those based on a percentage of assets invested.
Just imagine how things would be if financial advisers sold paint.
Customer: Hi. How much is your paint?
Financial Adviser: Well, sir, that all depends on quite a lot of things.
Customer: Can you give me a guess? Is there an average price?
Financial Adviser: Our lowest price is £12 a litre and we have 60 different prices up to £200 a litre.
Customer: What’s the difference in the paint?
Financial Adviser: Oh, there isn’t really any difference; basically it’s all the same paint.
Customer: Well, then I’d like some of that £12 paint.
Financial Adviser: When do you intend to use the paint?
Customer: I want to paint tomorrow. It’s my day off.
Financial Adviser: Sir, the paint for tomorrow’s use is the £200 paint.
Customer: When would I have to paint to get the £12 paint deal?
Financial Adviser: You would have to start very late at night in 21 days, or about 3 weeks. But you will have to agree to start painting before Friday of that week and continue painting until at least Sunday.
Customer: You’ve got to be *&%^#@* joking!
Financial Adviser: I’ll check and see if we have any paint available.
Customer: You have shelves FULL of paint! I can see it!
Financial Adviser: But that doesn’t mean that we have paint available. Regulations mean that we can sell only a certain number of cans on any given weekend. Oh, and by the way, I notice that due to an unexpected increase in our Painting Industry Compensate Everyone for Everything That is Not Our Fault levy that has just come through, our pricing software has updated showing the price per litre just went to £16. We don’t have any more £12 paint.
Customer: The price went up as we were talking?
Financial Adviser: Yes, sir. We change the prices lots of times per week to reflect the cost of regulatory changes and unexpected regulatory fees. Since you haven’t actually walked out with your paint yet, we just had to change prices to reflect this. I suggest you purchase your paint as soon as possible. How many litres do you want?
Customer: Well, maybe five litres, no make that six so I’ll have enough.
Financial Adviser: Oh no, sir, you can’t do that. If you buy paint and don’t use it, there are penalties and possible confiscation of the paint by the manufacturer, that’s regulation for you. If you change any colours there is a £50.00 switching fee, even if it is the same brand. Also, we give no refunds.
Financial Adviser: We can sell enough paint to do your kitchen, bathroom, hall and master bedroom, but if you stop painting before you do that bedroom, you will lose your remaining litres of paint.
Customer: What does it matter whether I use all the paint? I already will have paid you for it!
Financial Adviser: We make our TCF plans based upon the idea that all our paint is used, every drop. If you don’t, it causes us all sorts of regulatory problems.
Customer: This is crazy!! I suppose something terrible happens to me if I don’t keep painting until after Saturday night!
Financial Adviser: Oh yes! Every litre you bought automatically becomes the £200 paint and we will bill you accordingly for the shortfall.
Customer: But what are all these, “Paint on sale from £12 a litre” signs?
Financial Adviser: Well that’s for our budget paint. It only comes in half-litres. One £6 half-litre can will do half a room. The second half-litre to complete the room is £20. None of the cans are checked or have labels, some may be empty and there are no refunds, not even on the empty cans.
Customer: To hell with this! I’ll buy what I need somewhere else!
Financial Adviser: I don’t think so, sir. You may be able to buy paint for your bathroom and bedrooms, and your kitchen and dining room from someone else, but you won’t be able to paint your connecting hall and stairway from anyone but us. And I should point out, sir, that if you paint in only one direction, it will be £300 per litre.
Customer: I thought your most expensive paint was £200!
Financial Adviser: That’s if you paint around the room to the point at which you started. A hallway is different, you cannot believe the regulations we have to consider when selling paint!
Customer: And if I buy £200 paint for the hall, but only paint in one direction, you’ll confiscate the remaining paint.
Financial Adviser: Yes, and we’ll charge you an extra use fee plus the difference on your next cans of paint. But I believe you’re getting it now sir, regulation impacts upon everyone in some strange and unintended ways.
Customer: You’re insane!
Financial Adviser: Thanks for shopping with Conundrum & Confusing Financial Advisers and…….. have a nice day!