In the unlikely event that one day a history of retail financial services in the 21st Century is written – and the even unlikelier event that one day it’s read – the 2012 chapter will feature two big stories about innovation. The first, chronologically at least, is the arrival of pensions auto-enrolment in general, and NEST in particular, during the autumn. The second – introduced, strictly speaking, on 31st December, and so just squeaking in to the 2012 chapter – is the Retail Distribution Review.
As well as their bigness, these two big stories have two big things in common. For one thing, they’re both good news stories – not completely good news, and not without their not-so-good idiosyncrasies, but on the whole much more good than bad. And for another, both have been brought about by a combination of Government agencies and our regulator, the FSA – in the teeth of vigorous resistance, steadily intensifying in the latter case although gradually dwindling in the former, on the part of firms in our industry.
For those of us who would like to believe that the financial services industry has what it takes to identify and address consumer needs, this is all pretty depressing. It’s not so much that it took a combination of government and regulator to bring these developments about: both are, after all, in their different ways, the kinds of developments that require statutory intervention beyond the powers of commercial firms. No, what’s depressing is a) that the industry has so few significant innovations and initiatives of its own to put alongside these two, and b) that an industry which is forever claiming to put its customers first should have been so spectacularly and embarrassingly on the wrong side of both of them.
As regards the industry’s innovations and initiatives in 2012, the only examples of any significance that I can think of are in the area of payments – Barclays’ phone-based Pingit, and the wider range of contactless card payments introduced across the market during the year. Both of these will turn out to be significant – but not like auto-enrolment and RDR are significant.
(There is, I must concede, a distinct possibility that there have been lots of others and I’ve simply forgotten them: it’s entirely possible that if I’d been commissioned to write a review of innovation in, say, the year 345,720 BC, I might have needed reminding that both fire and the wheel had made their first appearances during the year. So if I’ve overlooked anything obvious, please cheer me up by letting me know about it.)
Not wanting to waste such small fragments of good cheer that I can muster, I don’t want to go off on one about our industry’s unwavering ability to choose the wrong side of every argument. All I’ll say is that thank goodness our noble and far-sighted life companies largely dropped their opposition to NEST when they did the maths and realised that they’d never make any money out of this part of the market. And no thanks to goodness or anything else for the repulsive claque of commission-junkie IFAs who continue to howl with fury about the alleged injustices of the RDR, most failing utterly to understand that all it’s really doing is the financial services equivalent of introducing a long, long overdue law forbidding stealing money from people while they’re asleep. One of the other big issues in this year of the Leveson inquiry is whether our newspapers can be trusted to regulate themselves: compared to many IFAs our newspapers are saint-like in their restraint and decency,
In that history book, the RDR, I’m sure, will be recognised as the single initiative which did most to save a large proportion of IFAs from their own viciously and suicidally self-destructive tendencies. (At the same time, I also believe that the RDR represents a turning-point at which our financial services industry, focused for so long around distribution by financial advisers, will change course and focus for the future on distribution directly to consumers. But clearly some advisers will survive this mega-trend, and it would be nice to think that the quality of the survivors will be a great deal higher than the quality of the many to whom we happily say goodbye and good riddance.)
Anyway. I’ll stop there. As you can see, contemplating this subject is having a bad effect on my ability to summon up good will to all men. But here’s hoping that when I look back in the same kind of way next year, we’re not so depressingly reliant on government and regulator for the year’s big good news stories.