Any regulatory system that can beef up consumer protection, galvanise investor confidence, and lessen the risk of skullduggery as witnessed in the past is a welcome development. And if it is achieved without overly obtrusive policing that would stifle enterprise and initiative, everyone gains. That's what the new Central Bank regime holds in prospect.
It's an exciting and challenging opportunity for intermediaries, affording different strands and different levels of participation. Having painstakingly cultivated and nurtured a reputation for "telling it as it is" in an independent environment, Moneywise has opted to submit to the rigours of broadly based Authorised Adviser status, in preference to the more widely taken-up but more narrowly-focused RAIPI status.
In truth this Authorised Adviser status is little removed from a non-regulated operating style under which intermediaries like Moneywise had already functioned until provisions of the Investment Intermediaries Act 1995 intervened to categorise and restrict future activity.
Under the new regime, Authorised Advisers are required to provide impartial and independent advice on all contracts available on the market. Client monies must be segregated and protected, finances and records open to inspection. These measures will foster tighter controls, which will impact positively on financial good order across the board.
Whether for a fee, a commission or a mix of the two, Moneywise aspires to trawl the full market range of options in advising clients. Any lesser status than Authorised Adviser conflicts with this mission.
An RAIPI is empowered to advise, comment on and negotiate exclusively with institutions with whom a working agency agreement is in place. This limitation, by way of example, proscribes any evaluation of offers from institutions who confer no such liaisons, such as EBS.
Similarly, advising Equitable Life policyholders (an office with which Moneywise had working relations with in earlier days) falls beyond the remit of RAIPI status, as does offering advice or comment on deposit interest rates, prize bonds, Credit Union accounts, and deposit-based SSIAs.
This said, overall there's room for everyone - with the new Central Bank's role serving perhaps to say good-bye to the weakest links. The intermediary market will now comprise tied agents, serving just one master; RAIPIs, who will argue that an existing multiple list of suppliers is more than adequate; and Authorised Advisers, looking ahead to exciting wealth-management opportunities in an unrestricted environment.
As and when the subtleties that distinguish the new classifications of intermediary begin to register, we believe such investors will be drawn in ever-increasing numbers to the impartial, sophisticated Authorised Adviser stable.
Alan Morton PhD, QFA, Director, Moneywise Financial Planning Ltd.
