We may be approaching the end of ‘counter based’ bank ‘advice’. The latest HSBC announcement of cuts to its tied service, though not to its ‘whole of market’ service, simply confirms a trend. I suspect this type of advice is going the way of the life office direct sales force. This is partly due to regulation, partly because banks have always struggled to keep this sort of distribution compliant. The two are related anyway.
Of course, we have to be a little careful with definitions here. It was never quite over-the-counter. You often had to make an appointment and go and talk to the adviser in one of those little glass rooms where he would look in your eyes to ascertain your attitude to risk, or he may even have got you to fill in a questionnaire. Some banks also owned an IFA subsidiary and some offered services that looked and felt somewhere in between the two. The history of all of them is a little chequered to say the least.
But before we pronounce the end of such services, we should note that Nationwide is trialing adviser charged direct advice. To me it sounds like a pilot, but if it works, perhaps it will provide a blueprint for these services to grow back. Nationwide strikes me as the sort of organisation that might just be able to reinvent the service, without a hard sales culture. Yet, I am still doubtful. I think we are seeing the end of this sort of distribution.
The RDR at one stage was thought to be going to hand a huge advantage to bank advisers. It is clear that the opposite is true.
Banks used to be able to distribute funds worth billions through these channels. It wasn’t all missold and it leaves a gap in terms of servicing Middle Britain and the mass market. I wonder if it will eventually provoke a policy response or will ministers and regulators decide we are simply “well rid” of them.