Fascinating article in FT Adviser.co.uk, regarding IFA firms and practices being targeted by tele-com firms, claiming that they need to purchase a £30,000 telephone system to fit in with previous FSA legislation. These IFAs are being warned not to fall for this ploy. Basically, last yr, the FSA outlined guidelines and rules on certain calls being taped, to allow the regulator to investigate and enforce legislation better. However, the FSA has had to re-clarify that this doesn’t apply to all types of Financial Advisers, and that many firms are exempted and shouldn’t listen to the claims of these tele-com opportunists.
My thoughts on this are simple, we are in the pit of one of the worst recessions in living memory, and all firms are scraping for business in all sectors. These tele-com firms have latched onto this idea and out of desperation have been shall we say “economical with the truth”, but once again, the FSA should have been clearer with the guidelines in this area, from the on set, not giving these opportunists the opportunity in the first place! The FSA are the regulators, they should be crystal clear in their regulation!
The Treasury Select Committee has called the Nationwide, Yorkshire & Britannia Building Societies to give evidence on “their part” in the current Banking crisis. The 3 Chief Execs are all to be questioned this week. Issues to be covered are the “uber-building societies” on customer service, competition & their future resilience. I don’t think the government have any thing left to prop them & the banks up with, in the future.
If we, as a sophisticated modern economy, are going to move forward and combat these events in the future, people need to become responsible for not just their previous actions, but their future part in the Banking Sector. I think the IFAs will gain from the uncertainty surrounding the Building Society & Banking Sectors going forward. Clients are becoming more sophisticated in their Financial Planning, partly through necessity, and I think there will be a shift back to traditional IFAs who give Financial Planning Advice not sell products!
A bit of good news for Legal & General, they announced that their UK and Worldwide business sales increased by 3% from December 2007 to December 2008! Sales purely in the UK rose from £1.321 Billion to £1.367 Billion, over this period.
Underneath these figures, a story is told. Apparently Protection sales were down last year, mainly due to the Mortgage slump, but due to the purchase of Suffolk Life, early in 2008, L&G Sipp business soared, as Suffolk Life are a Sipp specialist. It was also announced that they look quite robust going forward into 2009! I think their major challenge in the future will be one of distribution, with Northern Rock & Bradford & Bingley diminishing, I think L&G will look towards the IFA sector & their direct network whilst building up their partnerships again!
I couldn’t finish my blog, this week, without mentioning about the world of Mergers & Acquisitions. Resolution Limited, an organisation set up in 2008 as a “buy-out” firm, has posted a loss of £700,000 in its first trading quarter. On the FTSE, and having raised £660,000 from Investors, they are still eyeing new acquisitions in the IFA market this year.
If I was a betting man, which I am, I’d be surprised if there’s a single week, in the next 6 months when I don’t read or hear some form of article or news re- another acquisition, another buy-out or another merger. The arguments are very strong for acquisitions currently; not least economies of scale, but a larger firm that is “cash covered” can expand during a down turn such as Towergate, and be a true giant when the good times return. They are buying viable businesses with track records! Watch out Towergate, Resolution will be catching up!