Please forgive me for seeing similarities between the latest ‘post A day’ adviser number fallout and the ‘Highland Clearances’.
For those who do not have a knowledge of the clearances, they were forced displacements of the population of the Scottish Highlands during the 18th and 19th centuries that led to mass emigration to the Scottish Lowlands, coast and the North American colonies.
The clearances were part of a process of agricultural change throughout the UK but were particularly notorious due to the late timing, the lack of legal protection for year-by-year tenants under Scottish law, and the abruptness of the change from the traditional clan system and the brutality of many evictions.
The reality of the highland clearances can still be seen today in the remains of burned out, blackened houses, frequently comprising of whole villages and settlements standing as a testament to the greed of the few in hurting the many.
It is worth remembering, too, that while the rest of Scotland was permitting the expulsion of it’s Highland people, it’s ruling classes were forming the romantic attachment to kilt and tartan that scarcely compensates for the disappearance of a Highland race to whom such things were once a commonplace reality.
The chiefs remained in Edinburgh and London, but the people had gone.
We now have confirmed that as at the 11th February 2016 the number of level 4 qualified advisers in the UK is 29,144.
In January 2006 FT Adviser also notes from an FOI request that adviser numbers stood at 105,710
Some 75% of experienced financial advisers who could have helped provide valuable advice capacity have simply disappeared from the register since 2006.
With all this in mind, it was with some interest that I re-read an article from 23 November 2010 reporting that (according to the now knighted ‘Sir’ Hector Sants) “losing up to 20 per cent of IFAs was an acceptable cost in order to deliver the specific improvements brought in by the RDR, according to the FSA”.
In giving evidence to the Treasury select committee, the yet to be knighted Hector Sants said, “If the reduction in advisers was not acceptable the reforms would not be going ahead”.
To top this, it was reported that Lord Turner reckoned that a “reduction could be good news for consumers who may see a reduction in administrative costs”.
He said: “Some exit of “capacity” from the industry which is therefore an exit of administrative cost may be in the interest of consumers, it a cost which is being absorbed.”
What he actually meant was job losses, certainly not FSA or FCA job losses or cost reductions.
And along with the loss of livelihood for advisory firm staff, provider staff and paraplanners, we are now seeing the results of the ‘survival segmentation’ manifesting itself in consumer disenfranchisement- the unintended but sadly expected outcome of RDR.
The ‘new-speak’ use of words like “capacity” is a nicer, less disturbing way to describe casualties of the unintended or perhaps intended consequences of poorly thought out regulation? ‘Capacity’ is an FCA use of language, equivalent to ‘friendly fire’ or blue on blue’ instead of saying ‘shot by your own side’ or ‘rendition’ instead of state sponsored kidnap.
Those advisers who have survived RDR have built, grown and now transitioned some great businesses. This has taken many challenging years of serving their clients very well to achieve.
But will Andrew Bailey give this very simple thought some consideration,?
Fewer firms having to pay ever more in regulatory fees and levies (despite the logic that fewer firms to regulate should cost less) will see the those surviving financial advisory firms driven out of business as the regulatory cost to run them becomes prohibitive to all…… except the banks.
Rather like those Highland Clearances is’nt it?