MPs on the hunt for RDR solution
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Treasury select committee chair Andrew Tyrie says although it is clear to many people there is a problem with the RDR, a potential solution is less apparent.
In an interview in this issue of Money Marketing, Tyrie says he is confident the FSA will pay attention to the huge amount of concern expressed in last week’s Parliamentary debate and the current TSC consultation on the impact of the RDR.
Concern has focused on the plight of older advisers unhappy about taking new exams or alternative assessments and the potential damage to consumers caused by a significant fall in IFA numbers.
Tyrie says: “It is clear to many people, including IFAs and wealth managers, there is a problem. It is not clear to everybody what the solution is. The FSA has a proposal which has generated quite a bit of criticism, one of which is it is a one size fits all approach that may cause consumer detriment. That is something we need to examine carefully.”
In his first interview since becoming Aifa director general, Stephen Gay says elements of the RDR “need improvement” but warns advisers against risking their business in the hope the review will be derailed.
At a Money Marketing Pave the Way to Save round table last week, Aifa policy director Andrew Strange warned age discrimination rules mean grandfathering would allow inexperienced bank advisers through the door.
But he added: “For firms that want to work towards the RDR but will take longer to get there, for whatever reason, there should be a way for the FSA to help them with a more pragmatic, transitional period rather than a cliff-edge date in 2012.”
Strange said other solutions to assess competence which are not exams or “pseudo exams” should be looked at.
Also speaking at the roundtable, Cicero Consulting director Iain Anderson said the first quarter of 2011 will be critical. He said: “With any effective lobbying, you should never just adopt the ’we do not like this’ approach. You must turn up, saying ’we do not like this, so we propose that’. The alternative proposal to the RDR as it stands is not on the table with any clarity. From the IFA perspective, that is what needs to happen next.”
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Readers' comments (25)
Mr Smug | 9 Dec 2010 9:08 am
The first thing that the TSC should consider is whether there is actually a consumer demand for the RDR.
The fact that the banks appear to believe that their commission paying restricted advice proposition is going to be a great success would indicate that there isn't.
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Michael Fallas | 9 Dec 2010 9:27 am
Iain Anderson is right in what he says, but the biggest issue I see is whether the FSA will listen to what others have been saying for some time?
I think they believe that as this has been going on since 2006 they assume everyone was aware of this and so raising so many concerns at this late stage they feel it is too late to change.
The assumption seems to be if what Mr Hoban said is that AIFA was speaking for all IFA's when I suspect many feel they were not representing them at all.
Either way it is no basis to proceed but with no sensible options being put on the table that has the support of a majority, it seems likely the FSA will just plough on as usual regardless of the cost to the consumer.
The FSA is of course another matter altogether and for me is the real problem we have.
If we continue to regulate and legislate to protect the consumer when the costs far exceed the benefits then we are on a road to ruin and a never ending trail of paperwork justification for the sake of justification.
The costs of this so called and often failed system are now so massive (and still growing) it has become a huge industry in it's own right, yet they produce nothing of value and are like a leech to anything that grows sucking out their share of the growth.
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Alan Lakey | 9 Dec 2010 9:47 am
Andrew Strange's comment re inexperienced bank advisers ignores the fact that these advisers are currently allowed to advise.
The solution isn't to rid the market of advisers but to enable them to upskill in those areas where they wish to opperate.
The banks should be carefully scrutinised as it is perfectly clear that they have historically shown the greatest potential for mis-advising.
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Dom Browning | 9 Dec 2010 9:51 am
The problem is the only real alternative is to leave things as they are and why not? If it ain't broke, why fix it. Unfortunately this won't happen as firstly the FSA would lose face and secondly pressure from the banks (who sense a good victory against the IFA sector) will ensure it continues, not to mention the small but vociferous new model adviser lobby.
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Roddy McKenzie | 9 Dec 2010 10:00 am
Iain, are you suggesting that we do the FSA's job for them? Come to think of it we couldn't do much worse on some counts. This is hardly the issue here. The FSA are the ones who are not communicating with IFAs not the other way round.
ASs for grandfathering...what is that all about? Right now we are considered 'authorised' why does a change of date change that? It doesn't in any other 'profession' so why ours? Would it have helped the banking crisis?
As for band advisers sneaking through, come on thety can still 'sell' by target and get paid by them after RDR so no possible improvement there then.
Lets get a balance and get a level playing field not just try and stamp out the IFA once again. So far the IFA has proved a difficult animal to track down and kill.
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Julian Stevens | 9 Dec 2010 10:17 am
Experience suggests strongly that the only thing of which the FSA is likely to take note is a firm directive from the Treasury, which is why the support of members of the TSC such as Mark Garnier is so important. Also not to be overlooked is the TSC's call for the FSA to provide clear evidence that the RDR, as presently proposed, can and will actually deliver what the FSA has suggested. That, of course, rests largely on the FSA's Cost:Benefit Analysis which we already know to have been wildly wide of the mark on the cost side of the equation. And now the TSC are demanding that the FSA produces something in the way of credible forecasts for the benefits side, which suggests that the original C:BA to have been clearly deficient in that regard.
So what all this tells us is that the FSA quite clearly launched the RDR on the basis on a totally defective C:BA yet, until ordered to by the TSC, has ignored all calls to revisit it. Hence the support of MP's in general and of the TSC in particular are crucially important in this latest challenge to the mendacious tyranny of the FSA. Am I right or am I right?
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Anonymous | 9 Dec 2010 10:20 am
Unfortuatley, some of us and I suspect that is several thousand cannot afford to wait why the FSA deliberate. We are faced with having to decide now whether we sell our businesses whilst we can still secure some value or wait in the vain hope that commonsense will prevail and we can continue to earn a living doing something we have done for 20 years or more.Who was it who said that being self-employed was the most secure means of earning a living,not when you are regulated by the FSA it appears.
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Derek Gair | 9 Dec 2010 10:22 am
Andrew Tyrie is one of the few MPs that has a take on the issues (he was one of the authors of Leviathan at Large) so the evidence to the TSC will be understood by him.
Structured CPD is the way forward as far as existing advisers is concerned.
As usual, AIFA's understanding of the issues surrounding existing authorised advisers is woeful - as portrayed by Andrew Strange's comments.
Lets not miss the opportunity of giving Andrew Tyrie and the rest of the TSC the evidence the FSA chose to ignore much less consult on.
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Mr Fisher | 9 Dec 2010 10:24 am
If you cogent and well thought out proposals concerning RDR. Please do write to the TSC.
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Incompetent Regulators Awards Team | 9 Dec 2010 10:25 am
It's good to have Andrew Tyrie making noises here as he knows very well about the F-Pack e.g. author of the Leviathan at Large 2000. The prediction were spot on but now we have a much worse and out of control Leviathan run by a load of lying spin doctors lining their pockets. This over indulged beaurocracy has been passed onto the consumer which has been built into the product providers charges and to the detriment of the industry.
The FSA IS THE PROBLEM IN FINANCIAL SERVICES - period.
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