FSA came close to scrapping RDR
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The FSA considered scrapping the retail distribution review at a board meeting in March but decided to push on with plans for fear of “losing face”, according to Lansons director of regulatory consulting Richard Hobbs.
Speaking at the Protection Review conference held in London yesterday, Hobbs said the FSA came close to ditching the RDR as recently as four months ago and claimed the regulator is “not particularly proud” of the review.
Hobbs told delegates that he expected the RDR to continue, despite rumours to the contrary, after it was announced the FSA would be replaced by a prudential regulatory body at the Bank of England and a new Consumer Protection and Markets Authority.
He said: “As for the RDR, I guess that will continue to completion. There are a great many rumours around the market that the RDR is to be pulled - I think that is completely untrue. I might have to eat my words but my view is it will carry on.
“I have to say, it only just survived an executive committee meeting in March at the FSA. The FSA are not particularly proud of the RDR but it is a question of losing face, so I think they will carry on.”
The FSA held a board meeting on March 25 - one day before it published its RDR policy statement, the RDR discussion paper on the platform market and a consultation paper on pure protection sales.
Summary minutes from the meeting show that aspects of the RDR were discussed including the consultation carried out on the RDR up to that point and in particular comments from the consultation on adviser charging and additional compliance costs.
At the FSA’s Annual Public Meeting in June, chief executive Hector Sants stressed that the RDR would go ahead under the new regulatory regime.
The FSA declined to comment.
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Readers' comments (58)
Chris F | 16 Jul 2010 10:51 am
Something had to be done about consumers being ripped off by a massive grab for commission.
Is RDR the right way to do this?
Ask yourself one question: "Who is and was the most guilty of generating by far the most customer complaints and will this impact those companies?".
Is this 2 questions? I'm not sure, but I know the answers:
"The banks" and "no".
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Anonymous | 16 Jul 2010 10:53 am
A bit ironic they could not make a decision to scrap RDR, unlike the new goverment who did not waste too much time scrapping them.
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Anonymous | 16 Jul 2010 10:53 am
We all make mistakes, why can't the FSA admit that they have made a mistake with RDR that way should they try to impliment the terms outlined in the MMR papers this week, they will have set precedent to change their minds!
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Anonymous | 16 Jul 2010 10:55 am
"Fear of losing face" - That's ok FSA you have no credibility anyway so from that starting point you cannot possibly 'lose face'.
The FSA should not be in the least bit proud of this shambles. Actually it could go some way towards regaining face by coming clean now, admitting they are completely wrong & abandoning the RDR.
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Anonymous | 16 Jul 2010 10:56 am
So what all this fuss about the RDR comes down to is that they (the FSA) don't really believe in it at all but to stop losing 'face' (& probably their own jobs!) it has to be forced through!
It doesn't matter that clients will be forced into the arms of the Banks (like Lambs to slaughter) & thousands of IFA'S will either leave or go to the wall - as long as they save face!
Says it all really!
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Anonymous | 16 Jul 2010 10:56 am
Ha
Is it April Fools Day ?? !!!!
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Evan Owen | 16 Jul 2010 10:56 am
I am unsurprised but bitterly disappointed that logic did not prevail at that meeting but am hopeful that continuing and mounting pressure from all parties will bear fruit. It isn't a matter of losing face, it is a case of being pragmatic.
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Stephen | 16 Jul 2010 10:59 am
Upon reading the headline my first thought was "but they would lose face". If these comments are true then RDR should not survive in its current form.
If it's possible to have a flat rate of commission across all products (i.e. nil as RDR insists) then there can be a flat level that serves both consumer and the industry alike. For example, what would be wrong in having all investments pay 2%. Those advisers that want to earn more will have to do so by charging a fee.
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Kelvin Lillywhite | 16 Jul 2010 10:59 am
Absolutely typical of the FSA, everyone else can see there are flaws in aspects of the RDR and the FSA obviously do but rather than admit their mistakes they choose to "carry on regardless". It's nice to know that the FSA wont be losing face over this but many in the industry will be losing their livelyhoods. Isn't it also always strange when the story is negative about the FSA they're never available to comment!! They're a disgrace. The move to the bank of england will do nothing to change that. It'll be exactly the same people, behaving in exactly the same way, making the same mistakes, picking up the same bonuses but with a different letter head that costs us in the industry millions of pounds to come up with because they'll bring in some design consultant to do it.
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Anonymous | 16 Jul 2010 11:00 am
The FSA losing face how can they. They have been a complete shambles from day one so losing face is way down on the packing order. They would probably be recognised as a sensible regulator if they did get rid of the stupid RDR which was obviously thought up by a 22 year old graduate with years of experience
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