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Andrew Tyrie vows to keep up the RDR pressure

Treasury select committee chairman Andrew Tyrie is vowing to keep up the pressure on the FSA after it swiftly dismissed the committee’s  recommendation to delay the RDR by a year.

Yesterday, Tyrie wrote to FSA chief executive Hector Sants to express his anger over the regulator’s decision to reject the TSC report’s key recommendation in an embargoed press release published alongside the report.

Sants responded today by assuring Tyrie the FSA is taking his report seriously and suggesting the FSA will soon be publishing guidelines for eligibility for waivers from the RDR as well as looking at “further mitigating action” to help IFAs meet the RDR deadline.

In an interview with Money Marketing following publication of the letter, Tyrie says: “The death of Parliament has been greatly exaggerated and this will not be the end of the matter. I have no doubt when we next see Hector and the FSA’s chairman Lord Turner that this is an issue we will want to raise. We were very disappointed.”

He says the intentions of the RDR look “broadly right”, but that it needs to be implemented carefully to ensure the advice community and the interests of consumers are not damaged.

He says: “We are asking the FSA to think again, to show some common sense. With some adjustment, we think the proposals may be appropriate, but now we need to implement this with great care and it is with that in mind that our recommendations have been framed. We are talking about these IFAs’ livelihoods and thousands of savers who may be disadvantaged if we get this wrong.”

Tyrie adds the episode is a good example of the behaviour shown by the FSA which has lead the committee to launch an inquiry into the accountability of its successor body the Financial Conduct Authority.

He says: “It tells us so much about what people privately tell us of the FSA- that they simply do not listen enough. There should be someone keeping an eye even on these powerful regulators, everyone should be accountable to somebody.”

The TSC’s report on the RDR, published over the weekend, calls for the January 1, 2013 implementation date to be put back a year to give advisers more time to meet the QCF level four qualification requirements, alongside a softening of the cliff-edge deadline for experience advisers. The FSA released an embargoed response alongside the publication of the report which rejected the MP’s key recommendations and stated it remains committed to the January 1 2013 deadline.

Tyrie’s letter to Sants says: “We deprecate the Authority’s action. It was precipitate, giving the impression that no adequate consideration had been given to the arguments for the delay we recommend. This is unacceptable.”

In this week’s Money Marketing, Treasury select committee members attacked the FSA for showing “arrogance” and “contempt” for the committee in swiftly dismissing its recommendation that the retail distribution review should be delayed. Labour MP George Mudie (pictured right) says: “Accountability is a hot issue at the moment and this is a case in point. We put a considered view to the FSA and, without much thought and with some arrogance, it pre-emptively told us where to go.”

Conservative MP Andrea Leadsom says: “It is astonishing the FSA would rule it out of court when it was a very strong recommendation and pretty disgraceful that it would get its retaliation in before the committee’s paper was officially published.

“It shows real contempt for the considerable work that went into the report and it is a complete two fingers up to the committee.”
 Liberal Democrat MP John Thurso says: “Maybe it shows that seeing as the FSA is disappearing it has decided not to bother too much any more.”

Conservative MP Mark Garnier says: “The FSA has had a look at the report, shrugged its shoulders and said it is not going to bother with it and banged out a press release in response without even letting us know first. It is pretty unimpressive.”

Labour MP Andy Love says: “We were trying to find a proper balance between the needs of consumers and the difficulties some IFAs are facing in meeting the requirements. I was surprised at how quickly the statement came out but I would hope they would give some consideration of the points we were trying to make.”

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Comments

There are 36 comments at the moment, we would love to hear your opinion too.

  1. “We are talking about these IFAs’ livelihoods”
    Thankyou Mr Tyrie, The FSA have completely ignored this fact.

  2. Holden Caulfield 21st July 2011 at 3:59 pm

    The FSA is right for once. RDR should go forward as planned and the qualification arguments are nonsense. It is not like the schedule has not been made widely known and well in advance. To have not reached level 4 by 2013 shows a distinct lack of planning; which is perhaps why those that have not managed this level will no longer be allowed to plan for clients. Those that can, do and those that can’t go do somethnig else.

  3. MPs are now beginning to realise that the FSA doesn’t listen to anybody – it always knows best (except it doesn’t).

    10 years from now RDR will be seen as an unmitigated disaster. I actually believe that the requirement for a higher level of knowledge as evidenced by a few exams is right and proper and no delay should be necessary. It’s everything else about RDR that should be consigned to the bin – not postponed, but scrapped altogether.

    One final point – it ironic that those people who never listen to their electorate should now be complaining that the FSA isn’t listening to them !

  4. Incompetent Regulators Awards Team 21st July 2011 at 4:06 pm

    To Holden Caulfield

    Appeasing a bully never works.

  5. Just who does he think he is asking the FSA and old Hector to show some common sense, Paul Daniels?

  6. To HC. Its not just about qualifications. Try to keep up.

  7. holden caulfield
    beware the smug man !

  8. Holden cualfield
    You arrogant little…………
    Have you not heard the expression ‘to know all is to forgive all’.
    You know very little of the circumstances of the many practitioners with blemishless records who face having their livings STOLEN from them by the FSA acting ultra vires.. Maybe your perfect little life runs like clockwork, but sadly the real world intervenes for the majority trying to stay afloat in a regulatory environment that is simply unacceptable.
    I suggest you keep your trite comments to yourself

  9. Holden Caulfield

    Just checked the FSA register to see how log you have been registered you do not apear on it?
    I have been in this business for 25 years, can I ask you a question if you require coplexed surgery would you go to a surgen with 25/30 years experience and upto dare with his CPD which they have to do instesd of continually sitting the latest exams, or would you choose the newly qualified one with all the latest Qualifications? I guess we all know your answer

  10. Trevor Johnston 21st July 2011 at 4:38 pm

    I think the TSC are still missing the main concern ie commission. When a client instructs me to advise on post retirement income and I charge a fee of £1,500 – £2,000 he / she will run to the bank without understanding the true cost implications. Or what about the client who wants to set up a new pension plan at £200 per month. Do I charge him £1,000 up front? Can they afford this or will they again be forced to the bank?

  11. Holden Caulfield? Perhaps you should use your real name – not a character from Catcher in the Rye!

    Is it Mr Sants by any chance?

  12. Lets see – the RDR implimentation has been publicised widely for several years – the only ones who should have any concerns are those that have either:

    a) Been to lazy to prepare and shouldnt be permitted to practice anyway,
    b)Incapable of passing the new level 4 exams, who again should not be practicing.
    c)Those in denial, who have stuck their heads in the sand to avoid the inevitable – i have no sympathy for this final category, and there is no one to blame but yourselves (but inevitably you shall)

    The FSA has poured millions of pounds and years of research into RDR – and the TSC has considered it briefly, and decided they don’t like it – who’s opinions have been summarily dismissed there?

    I have no love of Mr Sants, the Bullying FSA or some of the more excessive elements of the RDR, but really those who argue against it miss the point, and argue largely from self interest.

    RDR will broadly be in the interests of Joe Public, and those of us who consider advice to be a career, and a profession, not a route to easy money, and should have standards according.

    As for the “ive been doing this for 40 years i shouldnt have to sit the new exams” brigade – simply doing things for a long time is no indication whatsoever of competence – as a policeman friend of mine once said “the only difference between and old thief and a young thief, is they have had longer to practice, and are better at not getting caught”.

  13. At last the FSA may have pushed too far. Good – the accountability of regulators is now the most urgent item on the FS agenda – the regulators MUST LISTEN to those they regulate and make rules that help business rather than hinder it.

    Business does not mean ripping people off. Good businesses don’t do that or they don’t survive (OK I know Vodafone is still going strong but…)

    The RDR is massively flawed and with many questions left unanswered (simplified advice, VAT, etc) it should be postponed indefinitely until we can actually write business plans based on what the rules are, rather than a best guess.

    Holden – Thank you for your comment after which it feels entirely wrong for me to use the name Mr Smug – it’s all yours if you want it.

  14. Re astevens
    And the only difference between a young policeman and an old one is the old one has quite possibly pocketed more money.

  15. Mr Tyrie states that “the intentions of the RDR look broadly right”, and this is not in dispute.

    However, the, issue they should have focused energies on are the alternative routes available.

    These were/are less disruptive, less costly, less crude and less regulatory.

    Changing behaviours by removing incentives can never work.

    Changing skill levels by mandating passes in examinations that have little relevance to your business model is foolhardy at best.

    Failing to adequately assess where the actual mis-selling comes from and introducing all-encompassing rules and parameters rather than adequately performing regulatory function is why we are where we are.

  16. I agree the blasted RDR should occur as planned because I am so sick of hearing about it. But it will patently cause availability of advice to reduce drastically, the cost will rise and it will be a disaster for many consumers. The tone taken by some of the posters such as ‘holden’ and ‘astevens4’ is regrettable. Once the regulator has finished eating the easy meat, even if it is those people’s fault for not engaging with the impending Armageddon situation, they will turn to the rest and pick them off at their leisure. It really is easy when you are the one making the rules – so don’t be so insulting to your colleagues in the industry. Sticking together to at least some degree will help everybody in the long run.

  17. Richard Wright 21st July 2011 at 5:07 pm

    Holden Caulfield

    This man is an idiot. Im 50 years old, Ive been in the business for 26 yearsand I am a one man band with a PA whom i employ. I work 5 and an half days per week and am rarely home before 8pm on a week day. I have a wife to support and two young children. Spending time with my young children in the little time off I have is imperative for their welfare and progress.When Mr Caulfield , do I have time to study for an exam which is between an A level and a degree ?? Some people are lucky, they work for larger organisations who pay them salaries and get study leave. I run a business and the last few years have been the toughest yet. Are you and the FSA totally oblivious of real life????

  18. Holden Caulfield 21st July 2011 at 5:23 pm

    One did not say it was ALL about qualifications, just that the qualifications deadline argument is nonsense. If a surgeon had 25/30 years experience I would therefore expect him to be eminently capable of understanding and practising the latest techniques in surgery, and if he could not attain the required current level then i would not have faith in his abilities as the world stands now.

    There is no excuse nor justification for grandfathering. Period. The deadline has been there for long enough and it i no good saying that someone is ‘taking livlihoods away’ or even ‘STEALING’ them (!!!!) because they are not. The ostrich routine will be what has cost livlihoods and there will be no-one to blame but those affected. A surgeon could have 300 years experience but if he is still performing brain surgery with no anaesthetic and a hacksaw i would be troubled. Experience is no good if the experience is of things that no longer apply.

    This is not quite that i admit, as the old G exams and J exams still apply, but, nonetheless, how long does it take a true professional to pass some exams in something they are supposed to know about anyway? CPD critical yes, but there has to be an academic benchmark as there are in other occupational avenues.

    Cry all you like but it is not like the message has not been there clear for all to see. As for TCF, fees and other items it is all stuff that planners have been doing for a while in anycase and it appears that the commission earning product salesman whose answer to all ills is a insurance bond with some up front and whose clients ‘won’t pay fees’ is the one with the most to lose from RDR [although maybe not as I hear that banks are paying a lot of money to people who can shift their detritus onto the masses].

    To be honest i am so bored with the ‘it’s not fair’ squawking about the RDR deadline that i really couldn’t care less what happens at 2013 for those not RDR qualified.

  19. “To be honest i am so bored with the ‘it’s not fair’ squawking about the RDR deadline that i really couldn’t care less what happens at 2013 for those not RDR qualified”.
    So why keep blogging about it? Go home and finish reading your school book Holden.

  20. Another Pissed Off IFA 21st July 2011 at 5:54 pm

    The real issue is not whether fees are better than commission or the level of qualification of advisers (within reason). The real problem with RDR is that it is government telling business how to run business. That is a HUGE problem and always will be.

    Consumers should have choice in how they buy financial products or advice (call it what you will) and how they pay for that advice and service.

    Government should not tell business how to run business.

    That is what the whole problem with RDR is.

    Anything else is just masking the fact that the consumer has to pay for what he consumes. The FSA is behaving like the worst bullying sales manager imaginable – pushing their product (RDR) whether the client likes it or not and whether the advisers who are actually charged with knowing their client like it or not, just because Head Office (Canary Wharf) wants it done a particular way.

    The whole thing is a disgrace. At last people are taking notice.

    Sants and Turner should be out on their ears.

  21. Treat Everyone Fairly 21st July 2011 at 6:23 pm

    Our elected government need to realise the power that the FSA have over this country, the FSA appear to be no longer answerable to the people they have been put there to protect. We should all remember Hectors abuse of power with his pre election email to the employees of the FSA. MPS are right “Accountability is a hot issue at the moment” and so it should be.

  22. Holden

    ‘To be honest i am so bored with the ‘it’s not fair’ squawking about the RDR deadline that i really couldn’t care less what happens at 2013 for those not RDR qualified.’

    And you obviously don’t care about huge numbers of clients being disadvantaged and serious damage being done to an already tarnished industry. Yes people have had plenty of warning you are right, and yes RDR has positives, but we are being bullied and Govt is telling us how to run our businesses.

    If that doesn’t stop, self righteous trumpeters like you will end up on the scrap heap along with everybody else. And given plenty of older IFAs can afford to retire, they won’t give a toss what happens to you.

  23. Holden:

    I have a level 4 qualification plus other bits and bobs and have complete my gap fill.

    However: The exams test NOTHING that is of direct bearing to this job. I learnt NOTHING from the diploma, but had to work hard to pass it.

    When the exams have a bearing on the job we do, I will agree about the qualifications issue.

    It is very, very rare to see straight technical mistakes in this business and the worst I have seen were signed off by highly qualifiied compliance officers. The problem is that the exams they had, had nothing to do with the real life issues at hand (the worst case was to do with investment of offshore trust monies).

    I think the RDR should go ahead on time now, but I do think the FSA have been out of control for many years and have not benefited the consumer in even the smallest part.

    Mr Sants, who already knows what his highly salaried job will be in a few years time, has dismissed out of hand the comments of the TSC.

    The man holds our own democracy in contempt, as he himself is contemptable.

    I shall be writing to Mr Tyrie, to say that I disagree with his conclusion but to also point out that something must surely be deeply flawed in a system that allows a jumped up idiot like Sants to dismiss the opinion of our democractically elected representatives.

  24. David v Goliath – except Goliath (the FSA) will win this time around.

    That said, I am totally against a 2-tier qualification regime where some advisers have met level 4 requirements and others are able to continue trading on their experience (many so-called experienced advisers would still be selling endowments and taking 7% on bonds given half a chance).

    By the way, I have been an IFA for nearly 20 years and I am 62 – anyone who wants to continue trading should be willing to prioritise their affairs to reach a proven level of knowledge which, in the final analysis, is all pretty basic stuff (especially if you are an ‘experienced’ adviser.

  25. The FSA’s history, since its inception in 2001 has been nothing but total incompetence and failure.

    RDR will be yet another Chapter in their long book of failure. It was’nt so long ago in March 2010 that they discussed scrapping RDR at their Board Meeting?

    They obviously don’t believe in it and know that it is going to be a complete disaster. Everyone can see through this farce, including, thankfully, our MP’s.

  26. Now that our elected MPs have been insulted and it has been made obvious to them that the FSA has no regard for their opinion, perhaps they’ll get off their backsides and reign in this bunch of bullyinging, bungling, arrogant quangocrats.

    I won’t hold my breath !

  27. I doubt you will find Holden Caulfield on the FSA register since he is not a real person. He is in fact the main character in J D Salinger’s classic novel “Catcher in the Rye”.

    The author of that particularly smug comment at the top of this thread was not brave enough to use their own name!

  28. what an awful mess! The FSA seems to be oblivious to common sense and the reality of more ‘useless change’
    To see the comments of the ‘holier than though’ Holden Caufield illustrates the lack of understanding by them of the industry and the history of fee charging vs coimmissions.Whne will they (FSA) wake up to the fact that for the majority of consumers and advisers alike there are ‘personal links’ called ‘realtionship and trust’ and no qualifications in this world will ever change this.The trsut once it is broken cannot be reapired by introduction a ‘better quakified’ adviser.There have never been ‘better ‘ qualified advisers for the majority of consumers.Remember that for many they trust their banks!!!! Is this what qualiufications do for the Industry?

  29. I am delighted with the action Of Mr Tyrie, the FSA it would appear have not used common sense at any time during this debate.They seem to think that they are above Parliament and forget who runs this country.

    I know of no other proffession which is forever asking the people working in it at a certain level to re-qualify. It is also scandalous that advisers of a certain age with 25 and 30 years plus doing their job are being forced out when they have valuable talents and knowledge not to mention the experience of dealing with people. There are many such advisers dealing with the wider client families and giving their time and experience with very little thought of finacial reward. What a loss this is going to be.

    We are at a very arkward stage in the financial services industry, do not throw out the baby with the bath water.
    There is no one to my knowledge who has not ever done their best for a client in a caring and professional way and survived long in their local community. Most of these advisers will be lost.

    Think, Think and Think again before exams are allowed to overide common sense. There is still time.

  30. To Mr Holden, Mr Stephens and their ilk:

    Leaving aside for the moment any concession you make to this not being simply about qualifications (which it most certainly is not – that is amongst the least of the issues here), let’s first deal with the qualifications issue:

    Being well qualified is, never has, and never will be, any guarantee what-so-ever of someone’s honesty or integrity; there will still be those who will “rip off” their clients if they can – as in any other walk of life – there will always be the bad eggs I’m afraid.

    Higher levels of qualifications are also no guarantee of retained knowledge, or the practical ability or skills to apply it. That, gentlemen, takes experience AND knowledge.

    I have encountered people with Financial Services Degree’s, who, out in the real world, didn’t even have the common sense to know, for example, if a person was even insurable! Ask them to sweep the street and they’d ask you “which side?” Qualifications of themselves mean virtually zero.

    British Industry has lost many high level skills over the last 3 decades or so by relying too heavily on pure qualifications rather than practical experience or innate ability. The loss of apprenticeships alone over this period has wreaked havoc in this regard (apprenticeships = experience, by the way).

    Also, whilst QCF level 4 may have been “out there for a long time”, its been out there half baked. It is only very recently that the actual syllabus has been fully finalised, and many have waited for this before proceeding, which doesn’t strike me as an unreasonable position.

    The main problem with the RDR, and the reason why it is sensible to take pause and consider a delay, is that the FSA themselves are ill prepared, failing so far to clarify key issues for the industry as a whole, such as fund rebates, which is leaving fund managers and platforms with increasingly less precious time to complete matters in time for the deadline. So, another half baked idea, then.

    We also have the small matter of needing to re-engineer business model entirely (for providers fund management companies and advisers), whilst in the grip of the largest financial crisis and fiscal uncertainty in living memory. And let’s not even mention the need to clarify the VAT issues.

    The FSA may indeed have invested (OUR) millions into coming up with RDR, but just as high qualifications are no guarantee of integrity or common sense, nor is spending millions on a misguided, unfounded principle, whilst also allowing the banks to bring us to our fiscal knees. If the RDR is so laudable and noble in its intent, why, despite their massive bad practices, has not one bank ever been closed down by the FSA from providing financial advice (as far as I’m aware??), or suffered the consequences of their reckless behaviour (yet). Would anyone care to explain (as if we didn’t know)?

    No. The RDR is not about consumers or their choices, or integrity, or noble idealism about higher qualifications. It’s about feeding the mass of consumers to the banks or online where there’s little or no come-back, whilst trying to dispense with IFA’s as far as possible by making the profession increasingly unattractive. They don’t want risk; they don’t want advice out there, and they don’t want you or I. Don’t believe me? Just read the FSMA document.
    Finally, can someone also tell me please, if the FSA is so interested in the public’s welfare, why it is spectacularly difficult to save in the UK, yet spectacularly easy to get into debt?

    Why, for example, can you go to one of the “many thousands of percent APR” money shops that are praying on the most vulnerable in society these days, and very simply and easily get into a constant spiral of indebted despair, yet would have to jump through hoops of fire to set up a £50 a month Pension or ISA?. Why have credit cards been as easy to get as falling off a log? Why credit cards are even called credit cards? Why don’t we introduce legislation forcing them to be called Debt Cards? How many would like to go buy something and proffer their “Debt Card” in the shop? It could be arranged that when the shop or online trader swipes their card, it displays on screen how much debt you’re in. That’d wake a few up. Then we rename “Debit Cards” to “in Credit Cards”.

    Oh – I forgot – the whole sorry mess we’re now in is because we’ve built false prosperity on invisible money. Bugger.

  31. Well I guess this face off between the FSA and the TSC will eventually prove who is running the country. The elected or the old school!

  32. Charles Bunbury 24th July 2011 at 10:16 am

    Vested Interest
    Why don’t Ifa and the FSA come clean this is more about vested interest than TCF and consumer protection. Generic information for regulated is available at the click of a mouse and covered by FP2, yet we are being told that certain sector of the industry cannot place a simple Convertible term protection product unless you pay the FSA fee to give investment advice. Ifa are not fund managers in my book they fund selectors, period subject to the global market. Put as client’s money in bank account and the chances are over a period of time inflation show its ugly face, select a security back investment the is no guarantee that it will not go down or up. It’s time to come clean, first it was our MP, followed by the newspapers and then the police.

  33. David Cathcart 24th July 2011 at 2:37 pm

    I have no issue with the vast majority of the RDR, however, these ill informed individuals like HC that suggest people have not prepared, should remember that the CII and the FSA have for the past four years chopped and changed the exam criteria for level 4 and assured us all that this would be the finshed article – which everyone now knows was not.

    So HC, those very astute advisers who you deemed have buried their heads, sat on their
    wallets while all this was being sorted and waited until the dust settled – smart move given what has gone on.

    The problem now is that some of these advisers who incidently are authorised, (unlike HC that RDR doesn’t even impact on), now have very little time to sit the exams and Gap fill before the deadline.

    If the exam fiasco was set in stone at the inception of RDR I would wholeheartedly agree with you, but seeing that it was only finalised less that a year ago then it is only fair the exam deadline should be extended and all those advisers that were hoodwinked by the CII on the basis that “don’t worry all our exams will be accepted”, should be refunded.

  34. offer holden corlfields remarks to the man who lost his partner last year ..perhaps he is whats wrong with our industry. thankyou

  35. Is RDR going to be another sensible u turn on an ill conceived and badly thought through matter of policy, or is it going to be another car crash policy with the public picking up the pieces later ?

  36. You are unlikely to find Holden Caulfield on the FSA register. He is the main character in “Catcher in the Rye”. I think this joker is best ignored.

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