Julian Knight: Let's call these 'advisers' what they are – salesmen

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The Retail Distribution Review sounds a classic bit of financial industry mumbo-jumbo. But in plain English, RDR is a study of how financial products are sold to the public. It is crucial because if change is carried out properly, it could help prevent future mis-selling scandals.

The interim version of the RDR was finally published by City regulator the Financial Services Authority (FSA) last week. Despite the jargon in the report, some bold and sensible proposals are made.

One in particular caught my eye – the plan to end the highly confusing distinction between financial advisers and independent financial advisers. In practice this would mean that only people who are free to offer products from all providers would be allowed to call themselves advisers. Those who work for a particular financial institution and offer a limited range of products would have to call themselves sales people.

Some banks and building societies are spitting tacks at this recommendation. No wonder, as it will rob them of a key sales trick – being able to present their staff as financial experts advising people on what's best, rather than as what they are: target-driven sales people. This is important as the vast majority of mis-selling has been carried out by "financial advisers" at banks, insurers and building societies. Call someone a salesman and consumers will be more on their guard.

The review is a long way from over; something called a "feedback statement" is being published in October. Let's hope the "salesman" proposal isn't watered down in the meantime.



Charges overcooked

It may be approaching summer but electricity and gas bills are still on many people's minds, and rightly so: the soundings I'm getting indicate that before the autumn we could see more double-digit price rises.

The Age Concern charity warned last week that if bills keep rising as they have been doing, the number of people in "fuel poverty" – defined as spending more than 10 per cent of their income on heating and lighting – will soon shoot back up to pre-1997 levels. Labour made much of its intention to end fuel poverty but the rise in oil and wholesale gas prices has put paid to that.

The National Consumer Council says social tariffs – put simply, subsidising the bills of the poor and vulnerable – is the best way to fight fuel poverty. I don't agree: skewing the market by introducing what amounts to a cross-subsidy between consumers is unfair to many households.

What should be done? Accept that the fuel poverty target is a pipedream and focus on how to make the market fairer. In particular, stop the energy companies from charging way over the odds to households using pre-payment meters. They have to charge a little more as their costs are higher with these customers – maintaining the meters and paying the shops that sell the meter cards – but some providers are clearly milking these people dry.

Ofgem, the industry regulator, is currently looking at the market and I think it is keen to bring the energy companies to heel over this. Let's hope both it and the FSA get a move-on.

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