As the FSA (Financial Services Authority) is replaced by the PRA (Prudential Regulatory Authority) and the FCA (Financial Conduct Authority) it made me think about when regulation was first introduced to the Life Insurance industry (in which I have worked for more years than I have not worked!) and the way in which the original perceived restrictions on giving “advice” to customers would actually restrict the natural sales process. Here is a tale that was intended to make a jibe at the restrictions being brought in by LAUTRO (the Life Assurance and Unit Trust Regulatory Organisation) in 1986.

Tongue firmly in cheek …

 
“I’d like to buy a pair of black leather shoes, please.”

“Sir, if it were only that simple. Here’s my card and here’s your Buyers Guide.”

“What’s this for?”

“It tells you that I can only talk to you about shoes and allied products sold by this shop. I can’t talk to you about shoes sold by any other shoe shop nor can I give you any advice on, say sausages, for example.”

“I see.”

“Probably the best way to proceed is to show you where we fit into the footwear industry. We buy in most of our products from the Far East at a fairly modest price and sell them on to the public at a considerably higher price; but of course out of the mark-up we have to pay for transportation, import duties, rent and rates, display staff, sales staff, cleaners and administration etc., etc. and our shareholders have to be paid a dividend out of the remaining profits. Not many people think about this when they buy their shoes, but we think it is important. With this in mind I’d like to ask you a few questions to make sure you get the shoes, or even boots, which are exactly right for you. It may be that when I have all the facts I recommend that you do not buy my footwear at all. May I proceed?”

“What do you want to know?”

“Well, how many arms and legs have you, for a start?”

“What have arms got to do with shoes?”

“Well sir if, for example you only had one arm and I sold you a pair of shoes with laces, that could be construed as bad advice by LAUSTRO.”

“What’s LAUSTRO?”

“The Laced and Unlaced Shoe Trade Regulatory Organisation.”

“What do they do?”

“Put the boot in. A friend of mine had to leave the industry.”

“What did he do wrong?”

“Sold a pair of carpet slippers.”

“What’s wrong with that?”

“Turned out the guy didn’t have a carpet. So you see, I need to build a full picture of you. For example, do you need shoes for business or pleasure, or business and pleasure? How many shoes do you have already? How many brogues, casuals, suede, plimsoles, slippers, sandals, wellingtons etc? How many suits – what colour are they? Do you have athletes foot? Can you touch your toes? Any corns or bunions, or does your family have a history of dropped arches? What kind of socks do you wear? How often do you cut your toenails? How much do you earn and what is your overall clothes budget? …………. Well, thank you for that information. I’ll give it some serious thought and would like to come back to you in two weeks time.”

TWO WEEKS LATER

“Ah, good morning sir. I’ve given this serious thought and what you need is a pair of black leather shoes.”

“Isn’t that what I asked for in the first place?”

“With respect sir, you have now had the benefit of my professional advice, based on all the relevant facts as given and you now know with some certainty that what you need is a pair of black leather shoes. All the guesswork’s been taken out of it. Here’s your Reasons Why letter – I recommend that you buy these black leather shoes because they’ll keep your feet dry, match your suits, look smart and you can afford them.”

“Well I’m glad that’s settled.”

“You want the shoes, then?”

“Yes please.”

“Right, if you’d like to complete this application form; here’s your illustration which I’d like you to sign. It shows a complete breakdown of costs and profits and includes my twenty-four pence commission. Your Product Particulars describe in great detail how the shoes are made and the Key Features are a summary of the product particulars, highlighting the risk factors”

“Risk factors?”

“Yes. For example, if you live too long, the shoes may need repairing. On the other hand, if you die before you have had your wear out of them, I’m afraid there’ll be no refund. even if they don’t fit any other member of your family.”

“I see.”

“So just to recap. You’ve got my card; your Buyers Guide; Product Particulars; Key Features; Illustration; Reasons Why letter. You will get a letter from my Head Office telling you that I do, in fact, work for this company and also a “Cooling Off” notice. You can return the shoes within fourteen days and have a full refund if you don’t like them for any reason. How would you like to pay, sir?”

“Cash.”

“Ah! Well, would you mind nipping home for a copy of the gas bill or something to prove your identity as you are not known to me. One last thing sir. Do any of your friends require shoes?”