'FSA nearly axed RDR but feared losing face'

22 July 2010 | By Natalie Holt

Advisers are outraged at the suggestion that the FSA decided to press on with the retail distribution review, despite coming close to scrapping it in March, for fear of “losing face”.

Lansons director of regulatory consulting Richard Hobbs told delegates at the Protection Review conference last week that he believed the FSA nearly ditched the RDR at a board meeting earlier this year but decided to push ahead with the review despite not being “particularly proud” of it.

He said: “My view is that the RDR will carry on. 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.”

Speaking to Money Marketing after the conference, Hobbs added that when the time comes to carry out the post-implementation review, the FSA will need to take “a very rigorous look at what has actually been achieved”.

It is understood a minority of FSA board members had concerns on whether the review will ultimately change the market for the better. But at the FSA’s annual public meeting in June chief executive Hector Sants reiterated the RDR would be going ahead.

Axxis Financial Planning director Owen Wintersgill says: “The FSA has created a bit of a Frankenstein’s monster in the RDR and there is no going back.”

Adviser Alliance director Alan Lakey says: “I cannot imagine why any free-thinking individual would want to continue with a set of proposals that have antagonised the bulk of the adviser population.”

SimplyBiz joint managing director Matthew Timmins says: “It comes as no surprise that the FSA decided to carry on regardless. What I find wholly inappropriate is that the needs of the client have been ignored.”

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