Simplicity should not mean incompetence. Our watchword must be professionalism, says Sandy Scott
Thousands of words have already been written about the Sandler and Pickering reviews into long-term savings and pensions, and many more will follow - not least after we heard the authors address the Chartered Insurance Institute (CII) Conference in Birmingham in September.
Many commentators have echoed their call for greater product simplicity as a means of encouraging saving - but it is the job of bodies such as the CII and the Society of Financial Advisers to inject practical thinking into the debate.
First and foremost, simplicity should not mean a dilution of standards. Advisers should still hold appropriate levels of qualification and be able to demonstrate their continued competence in their field of expertise. Essentially, there is nothing wrong with a complex product if it is sold properly. By the same token, we should not forget that it is entirely possible to mis-buy a simple product. I am sure John Tiner will add to this debate in the autumn with the publication of his long-awaited report into regulation of insurance.
All these reports and reviews will require some serious joined-up thinking across government departments, not least to simplify tax, benefit and regulatory regimes, if anything is to come from Sandler and Pickering. With more reports due, it looks unlikely we will see any changes until 2004. The impact of this delay and confusion on the already fragile level of consumer confidence in the sector is open to question.
One thing is clear, regulation of general insurance business must be proportionate to the nature of the market. A wholesale adoption of the life insurance model for conduct of business rules would be wholly inappropriate.
We will address issues surrounding both reputation and regulation at the CII conference in September. But, whatever the outcome of the raft of reports, there is one thing we can all do now. The aim for anyone working in the general insurance and financial services industry should be professionalism. That means the demonstration of professional knowledge and understanding, a commitment to maintain competence, and adhering to ethical practice in all that we do and in the advice that we give.
Dr Sandy Scott is director general of the Chartered Insurance Institute (CII)
