Simplified advice? The economics don't work, says Prudential's O'Dwyer

Just another loony pie-in-the-sky idea dreamt up by some bunch of armchair theorists with nothing better to do with their time. If they had to work in the private sector and actually make a living from what they do (not to mention paying all their regulatory levies), they'd maybe see what life is like in the real world of commerce.

Stakeholder advice won't work any better than did stakeholder pensions.

The bulk of the market simply won't pay for it - and if they had to pay, they wouldn't be opting for a 'simplified' option.

However, the FSA has yet to realise this. They're either busy denying there's a market for this, or engrossed in dotting the 'i's of their business as usual - a business which precludes any pragmatic understanding of the UK market.

They continue to operate in silo, in the most insular of manners, and without sufficient recourse to the scads of information and research that the industry tries to put to them.

Understandably, no one this side of the FSA is overly impressed.

Scott was correct in saying that the industry should define 'simplified' advice, and not the FSA - however, the danger lies in that consumer access is a Treasury field of interest; as such, the FSA are not overly concerned.

This will make it all the harder to sell the idea to them - and to sell industry solutions - especially where they likely run counter to the FSA's real aims around remuneration and professionalism.

Could we run 'simplified' advice as a lower-tier, with a lesser qualification? Or maybe as a regulated process?

In reality, yes - those ideas and a hundred more like them - but not without tripping over some special-interest grouping at the FSA.

Worse still, we haven't even gotten to the FOS yet. Lord help us.

On the bright side, for the FSA, less sales looks bright on the regulatory agenda, does it not?

Nothing at all anchored to reality.

Lets just ignore the problem that with all of the regulation so far issued that there are over 1 million bank complaints, pressurising the compensation scheme and PI insurance to the limits.

Solution? Lets de regulate an area of advice most probably adopted by the banks, the very cause of the current complaint problem.

The solution is all very simple, to raise confidence in the industry get rid of the source of complaints, once they are down to an acceptable level then the associated costs vanish, insurance plans per adviser possibly £1700 but maybe £400 excesses instead of £10k?

Then the industry has a base to build upon, nothing can be built or any other advice outlets started from the foundation of runaway bank complaints and runaway consumer costs associated with this area of business.

I disagree with Prudential that the numbers of those leaving will be less than expected, I hope they are correct but I am seeing a lot of young people leave and planning to leave now.

The older ones will not leave until Dec 2012 so we will only get those numbers once someone adds them all up, so it will probably take them until 2014 to calculate this. We will sooon tell by our PI insurance premiums and compensation scheme costs, if they go up by about 60% then probably half have gone.

No matter what additional regulation the FSA releases the banks just keep churning out their poison in the industry, it will eventually choke us all unless the FSA grasps the nettle.