Good times are ahead in these sectors. It may take a year or two, but the signs are there!!
For my sins, this is my specialist area and one of my key responsibilities is regulatory compliance for my company. The FSA have spent years making compliance expensive and difficult. Creating an area where profit is considered a dirty word. Times they are a changing.
The FSA are gradually shifting their stance away from prescribed rules towards "principled regulation" where the way of working is left to the business, providing the business can show it is treating customers fairly. It is trying to delegate its responsibility for regulating retailers of these products to the lenders and insurers and has accepted that CAT standard and stakeholder were mistakes that have almost killed off quality advice.
Meanwhile the conservative party have made this area a proposed plank of its next election manifesto and have set up a committee under John Redwood to look at the FSA role and advise how it can be reduced and simplified. Redwwod is quoted as preferring a caveat emptor approach to regulation whereby all advice companies are checked to ensure they are qualified but left to decide for themselves how much and how to charge their clients.
This has led to many changes in attitiude, including an acceptance of "churning". For years, a company moving a customer from one investment ofr life insurance to another risked investigation and fine, as it was automatically considered bad advice unless otherwise proven. The industry has kicked back, showing that reduced premiums or increased benefit made it good advice, and this was acceptable in all other industries, such as Gas and Electric supply. Churning is often good for the client, good for competition but excellent for brokers who could leverage regular commission by regular churning. profits up.
The FSA have reduced their fees recently. Profits up.
CAT standard and Stakeholder are almost dead in the water. these areas covered almost all run of the mill financial products and limited profits at 1%. When they finally go - profits up.
In summary, as these changes come to pass, costs of regulation will fall and margins will rise. innovation will come flooding back and companies in these sectors will get the chance to flourish. Which ones are the likely winners?? I'll leave that to better analysts than I, but I think we will see the biggest gains from those with mmost to gain, ie brokers. We may also see a wave of M&A activity if the close link rules are relaxed, which is the next area I think will be attacked. The end of polarisation has signalled that as the next logical step.
That would allow the big insurers to suddenly try to create or buy brokerage networks to more prominantly push their own product.
Hope all that helps anyone looking or investing in the sector. Anyone who fancies a particular company, drop them in below and we wills ee if the sector really does enjoy some halcyon days again.
Alan

Thanks Alan, point taken. I would not dare to begin trying to work out which company is going to benefit most but I feel that there has to be a surge in M & A's in the sector.
kim