FSA must re-affirm RDR objectives
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The Association of Independent Financial Advisers has today published an RDR manifesto that accuses the regulator of losing sight of the objectives of building consumer trust and widening access to advice.
Aifa says the RDR must lead to more consumers having their financial needs and wants addressed and the FSA should reward firms that invest in their business and its people to deliver the RDR outcomes.
It says no good firm should be put out of business by “arbitrary dates imposed by the regulator” and work based assessment and vocational training must be recognised as an equivalent to qualifications.
Aifa adds that the FSA needs to re-affirm its RDR objectives, so that it can be held accountable for delivering them
The trade body will present its full submission to the regulator later this week.
Director general Chris Cummings (pictured) says: “The RDR makes sweeping demands on the financial services industry, and the professional advice community in particular. And while we support the drive towards higher standards of professionalism, we are concerned that the current proposals will not meet the original objectives of the reform. There is a danger that the implementation of some of the proposals by the current deadlines will lead to fewer consumers being able to access independent, financial advice - and those who do will have to pay considerably more for it.
“While AIFA was supportive of the original objectives of the RDR, we have yet to see a detailed cost benefit analysis of the reform that stands up to scrutiny. Since the start of the banking crisis, many more people have sought out independent financial advice. IFAs are the most trusted part of retail financial services and that is why the FSA should be working with us to bring improvement, not risking the future of firms by rushing to impose deadlines that were set before the recession.”
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Readers' comments (18)
Raymond Woodruff | 27 Oct 2009 10:43 am
Having been in the industry for over 33 years and in that time prided myself in keeping up with changes as they happened and giving a good service to my clients I now feel that at my time of life (57 in Feb 10) the pressure of this new environment is to much. I cannot be alone in this as I believe average IFA is over 50. Surely the work based creditation basis is better. To have take these new exams by end 2012 (my 60th year) does seem worthwhile especially when trying to keep business coming in these very difficult times. I have recently taken on my daughter to train and develope to take over when I semi retire. These new demands will now threaten her future if I am unable to stay in the industry. I am very much in agreement that we should be asked to maintain our standards but this really does seem to be ill thought out. How many INDEPENDENT will be left after 2012. I bet the banks cant wait!
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Evan Owen | 27 Oct 2009 10:47 am
All this rhetoric spewing out from so many places, is there a more effective method of communication?
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Sean McCabe | 27 Oct 2009 11:00 am
I am not against the general concept of improvement by study & examination having taken the trouble to obtain my ACII qualification many years ago. I am now 63 years old with just over 40 years experience in financial services working for major insurance companies, including many oof these in management, and latterly just over 13 years as an IFA. At my age I just do not have the enthusiasm any longer for studying & exam taking & neither do I have the time. The outcome for me & my clients .......?
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Anonymous | 27 Oct 2009 11:00 am
I fully agree with AIFA's stance most people agree with improving standards but the deadlines imposed without been told exactly what is reqiured is ill thought out. The qualifications are going to be a major stumbling block for many epsecially with the time frames imposed. Having just sat J05 which took me out of action for a huge amount of time to learn useless tables of information that is highly unlikely to benefit anyone. All this studying did was put me under pressure take me away from my clients and the benefit unltimatley is to say we are more proffessional. I am all for us having a good knowledge of what we are advising on but we really need to be tested on what is relevant and likely to help consumers. Having had a good moan about the exams may I say I do support them but they need to be relevant and likely to be of benefit to the consumer.
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SIMON MANSELL | 27 Oct 2009 11:02 am
RDR is the brain-child (brain-less-child) of Callum McCarthy, kick-started by his Gleaneagles address in September 2006.
The regulator, incapable of original thought acts like a regulatory sausage machine! McCarthy threw the RDR switch and no one at the FSA has had the presence of mind to question many of the inaccurate assumptions. RDR like TCF is just jobs for the boys. The machine just keeps pumping out the same rubbish:
“The distribution model was broken, the distribution model is broken, the distribution model is broken.”
There may be faults but when you consider the post 2012 wasteland the FSA has as an alternative, what we have now is a paradise!
My sausage machine says: “The regulatory model is broken, the regulatory model is broken”.
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Julie Bayley | 27 Oct 2009 11:02 am
I don't think any IFA would argue that Financial Services in the UK needed reforming. However recent studies have outlined that the present RDR proposals specifically impact IFAs & Financial Planners far more than they do Banks & large institutions. This cannot be right surely in light of what has transpired in the last couple of years.
Whilst I think it totally justified that as an industry we offer a professional high quality service to consumers I wholeheartedly agree with Chris Cummings that why should anyone be told they aren't already providing that high level of service to clients and they need to be put through further expense and time consuming studies & examinations, when no body is even prepared to look at what they are already doing for clients.
One only has to look at the recent tables released by the FSO to see where the majority of consumer complaints to know where the majority of the problems with the public receiving so called financial advice lies. Yet we are ALL being tarred with the same brush & it's simply not fair! At a time when we've struggled as an industry.
Whilst there are no doubt bad IFAs, there are also some very, very decent, ethical advisers and yet I know many who are simply retiring.
IFAs need the support of the FSA not a constant undermining of our status.
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Alan Munro | 27 Oct 2009 11:10 am
While it's easy to be sympathetic with people like Raymond Woodruff and the many IFAs who find themselves in a position of having to acquire formal accreditation of their skills at such a late stage in their careers, there really isn't another way round this challenge. The fact remains that many people in the industry are inadequately qualified at the moment and it is in the whole industry's interest to enforce a minimum professional standard.
For those who actually do possess the knowledge required to pass the exams, it shouldn't be too difficult a task to comply.
As for Aifa's latest outburst, guys, get over it. It's happening, accept it. It's now time to help your members to prepare for it.
Incidentally, part of the ambition of the Retail Distribution Review is to properly professionalise independent advice. That inevitably means that it will be available to fewer people and that the price will be higher. The subtext to that initiative is, of course, that independent advice is not the only way and the FSA is actively challenging the industry to come up with innovative and appropriate solutions for the 21st Century.
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David Munro | 27 Oct 2009 11:28 am
If the distribution system is broken, it was broken by the Financial Services Act of 1988!! Since then, aided and abetted by the consumer lobby and fearful product providers, ignorant civil servants have shillied and shallied consumers into a much worse place than they ever were traditionally. What I mean by ignorant is a complete lack of understanding of such words as "Sell." Otherwise the utterly stupid word "mis-selling" could never have been coined. I have no axe to grind being retired and only ever an observer.
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Mark Ericsson | 27 Oct 2009 11:43 am
I have never met an IFA who isn't interested in investing time and effort to raise the standard of technical knowledge which he will use in his role as an IFA.
Conversely, I have never met one either that wishes to invest time and effort in learning technical knowledge which is educationally interesting, but which doesn't carry through in practice to their day to day role as and IFA.
One RDR objective is for the industry to have advisers whose standards of professionalism inspire consumer confidence and build trust,
We hear talk of raising standards, but a close look at the current Diploma Level examinations makes one realise that the Dip exam syllabus appears mostly to expand outwards the breadth of technical knowledge, and does considerably less to increase the depth (or raise the level) of knowledge.
Broader knowledge is not the same as deeper knowledge, and the potential for resentment by IFAs is borne out of the risk that the new exam framework to be announced in 2010 may slip into making the same mistake - i.e. forcing IFAs to demonstrate technical knowledge about subjects which are outside of their day-to-day field of work, and if not used, will quickly be forgotten. What a waste !
The technical learning within the current Diploma Level qualification subjects from the main examining bodies are perfectly legitimate, but if they cover technical areas which are not regularly practised in, they should be despatched to a SPECIALIST diploma module, and kept well away from the proposed CORE exam modules.
By doing this, our sector may just retain the goodwill and enthusiasm of hundreds if not thousands of IFAs and not needlessly lose a huge volume of long established professional financial planners, whose CORE knowledge is what attracts consumers, and together with the IFA's personality, style and caring approach, develops client loyalty.
Forcing IFAs to learn, be examined and then instantly forget technical knowledge which will almost never be called upon by general practitioner IFAs is not necessarily the answer,
We are at a very critical point now, and we must hope that the Working Groups tasked with responsibility of defining the new exam structures will deliberate and conclude appropriately.
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Alan Lakey | 27 Oct 2009 11:53 am
Some observers are saying that Chris Cummings has been shamed into being more vocal due to the support received by the Adviser Alliance.
Whether this is true or not it is welcome news that AIFA is climbing into the trenches again.
The RDR aims must be seen in the light of reality rather than some fanciful notion of perfection. The original RDR submission spoke of a financial nirvana and reminded me of those pleasant people who wish for peace on earth and bountiful goodness all round. The reality is somewhat grimmer and all theorists must include reality into their equations otherwise the aims become impossible to achieve.
We know that there is scant evidence of commission causing consumer deficit but, even if the evidence was persuasive, there are easier routes to take than opting for its removal.
We know that many advisers need to increase their competency levels but this should only be reflected in the areas within which they advise - not regions which they leave alone.
We know that experience counts for more than exam aptitude yet the RDR viewpoint is that, yet again, they want some measurable statistic by which to determine the success of their policies. Again, it is unwieldy and will prove counter-productive in terms of outcomes.
Dear regulators, please take note. It is not yet too late to adopt a sea change and consider more reasonable plans which will provide better, cheaper and more desirable outcomes.
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