IF, FOR some reason, you have read the City watchdog's latest annual report, perhaps as part of the latest innovation in interrogation techniques, I feel your pain.
The 124-page report came out on Wednesday, and I would be lying if I claimed to have been on the edge of my seat as I flicked through it. But, as an exercise in self-justification, excuses, caveats and buck-passing, the document has a lot going for
it.
The Financial Services Authority (FSA) has been blamed in many quarters not only for helping to create the conditions for the spectacular meltdown in financial markets, but for failing to address the issues once they came to light.
At various points in the past 18 months, the FSA has itself blamed brokers, advisers, bankers, directors, non-executive directors, the global economy, the Treasury and my sister's dog for the crises that have unfolded on its watch. There was an apology over Northern Rock, but if you Google "FSA" and "blame", you will find the regulator lashing out in all directions. It's not one for admitting culpability, and it wasn't going to start in its annual report.
At this point, I was going to indulge in a rant about its many failures. But at the final hour, it produced a rare reason to give it a very gentle pat on the back.
The FSA's latest proposals for the reform of the way in which financial advice is provided and paid for are far from perfect but better than many expected.
The headline grabber is the ban on commission paid to advisers by providers for selling their products. This is a contentious issue, and thousands of IFAs, not to mention a few insurers, will fight it to the bitter end. But it is due.
Products that don't offer commission, most notably investment trusts, are not sold in great numbers by IFAs relying on commission. That itself suggests those advisers are not always acting in the best interests of investors.
Trust in financial services is in short supply and, while advisers are paid incentives by providers and the suspicion lingers that their recommendations are based on their own commercial needs, rebuilding confidence will be virtually impossible.
Anyone using an adviser will still be able to request that their fees are deducted from their investments, however, and that flexibility is vital.
In the same vein, the FSA's call for minimum qualifications for all advisers – whether they are independent or in your local bank branch – is welcome. Financial advisers are embracing professional standards in growing numbers and that can only help improve the level of trust in advice.
A better distinction between the advice given by truly independent advisers and those who are not, whom the FSA wants to label "restricted", is also well overdue, as the current distinctions are not clear enough.
There is so much more to be done to make financial advice more accessible, not least to those on lower incomes (and removing commission does not counteract that), and to improve the public's perception of the value of truly independent advice. But the FSA has earned more brownie points than brickbats on this one.
BANK accounts are taken for granted, but it's estimated that 1.84 million adults in the UK do not have one. This is one of the great untold stories, an issue with implications that few people are aware of.
It is the most vulnerable in society that are typically excluded from basic banking services, and they end up more excluded and poorer as a result. Getting a job or even benefits is virtually impossible without a bank account, while housing issues become more complicated and services such as utilities are more expensive.
The sterling work being done by numerous unheralded financial inclusion groups all over the UK is slowly beginning to pay off. The 1.84m adults without a bank account is an improvement on the 2.09m a year ago.
The number is still far too big, however. Those who still don't have a bank account are effectively excluded from financial services at a time when the crisis in the economy, especially rising unemployment, makes them especially vulnerable.
The full article contains 711 words and appears in The Scotsman newspaper.
