In two minds about minding the ABI’s gap
Tuesday, October 13th, 2009

The ABI’s savings manifesto launches today with another attempt to fill the gap between IFAs and Money Guidance and the rest of the population who will not get access to advice.

This is of course, only one brief line in the manifesto. All the rest of the stuff, pretty much makes sense, from restoring tax, simplifying the DC regime, encouraging employers to accelerate contributions and for a Government to consider fostering schemes that offer risk sharing. All fine. Good stuff. Couldn’t agree more.

However the Money Debate finds itself in two minds about point one. Here’s the first mind. Where is that gap? Measure it now. How far down the income scale are existing IFAs delivering advice. Where exactly is MoneyGuidance? Can we actually even measure the gap?

Still in mind one, is it widening? Well, yes it is, or it is certainly going to for the next couple of years as exam and model change requirements kick in, as the RDR goes ahead as planned. This leaves some advisers who currently serve lower down the market baffled, and wondering why they are being driven from serving this market.

Mind two. There is probably a need for people lower down the income scale, who do not want to see an IFA, to get streamlined advice. A great deal of distribution infrastructure has been lost.  Streamlined advice could also possibly be offered by IFAs. Indeed, the Money Debate would like to see IFAs get an input.

However what it shouldn’t be is a sort of Trojan horse either for the worst aspects of DSFs or indeed for banks. This site was first to call for an FSA inquiry specifically into bank advice. It is vital their role is examined and in several cases their methods cleaned up, before the banks get any increased role in the future distribution even of simpler products.

Obviously the final question will be what sort of regulatory framework will attach to this, the ombudsman being the big issue.

But bringing the two minds together so to speak, the principle of providing more extensive distribution of products may well be a good thing, but some IFAs will be wondering why risks are being taken with the existing advice infrastructure while the ABI is hard at inventing something new.
Polly says scrap higher tax relief not public sector pensions
Tuesday, September 15th, 2009

IFAs and providers should know the opposition’s arguments when it comes to pensions tax so they can think of ways to contest them.

The industry is concerned that Labour’s last gasp may involve the  removel of more higher rate tax relief. Certainly most feel that the Tories, if they win the election, will not be able to afford to reverse the last change. We shall see.

However at a meeting in London last night I heard one argument that the industry may well need to bust, if it is to oppose any change effectively.

The Guardian columnist Polly Toynbee has a formidable intellect and is certainly a forthright advocate of many broadly social democratic policies. This week, she provided opposition of a sort to  Oxford Professor of Social Policy Stein Ringen at a meeting at the Royal Society for the encouragement of Arts, Manufactures and Commerce in London. Ringen was himself busy demolishing Mr Brown’s record from the left of the political spectrum but more significantly by looking at what all that spending actually achieved. His book is titled “The Economic Consequences of Mr Brown”. 

I am going to come back to that later in the week, when a webcast is available, because I do not think it is possible to hear a more damning critique in half an hour showing how New Labour failed on its own terms as well as everybody else’s.

However turning to Toynbee, prompted by questions about the unfairness of state employees’ pensions, Toynbee simply said that the cost of providing these pensions paled in comparison to those offered to the rich. She suggested that rather than reforming public sector pensions, tax relief should be equalised at the basic rate.

In another part of the debate she also suggested that the Tories’ decision to allow pension contribution holidays to DB schemes was more irresponsible than Labour’s pensions tax raid. Actually I think they were both equally stupid but the latter was altogether more cyncial. Labour’s first stealth tax really was the most stealthy of the lot.

However that is an argument that is really about the past. The tax relief argument is very much alive.

Toynbee is influential well beyond the readership of the Guardian. Some Cameroons supposedly bear her opinions in mind.

The industry should marshal its arguments.
One idea for cheering up a depressed taxman
Tuesday, July 28th, 2009

A Treasury select committee report into Her Majesty’s Revenue and Customs reveals that only 25 per cent of employees are proud to work there while an alarming 16 per cent are satisfied with their jobs. Morale is low. The taxmen don’t like the merger with the customs men, fear for their jobs and don’t like the public’s attitude to them.

Now I know many people will say that taxmen should not be too surprised if they are unpopular. They have been since ancient times though it is a bit better now that they collect fixed amounts, rather than getting to keep any surplus, as say under the Romans. That really didn’t go down well.

But I still think something could be done to cheer them up a bit and I have one idea.

How about not taking a big reform like say pensions simplification – which had a certain logic but took years to devise and then in one foul budget swoop complicating everything all over again. We’ll probably need another one soon. No one ever likes having to do a job done done well in the first place, all over again. It might make a few taxmen and women and bit happier and in these difficult times, that is probably better for all of us.