FSA tells consumers advice under RDR won't cost more
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The FSA has told consumers receiving advice post RDR will not cost them any more, and argued those with a small amount to invest will not be prevented from accessing financial advice.
A page within the consumer section of the FSA website, updated last week, provides information about how financial advice will change under the RDR.
Titled ‘changes to the way you receive advice about investments’ the web page talks consumers through the concept of adviser charging, where cost of advice is agreed upfront, as well as the increase in professional standards.
In response to a sub-heading ‘does this mean receiving advice will cost me more’ the FSA argues that investment advice has never been free.
The FSA web page says: “The price you currently pay for advice is often hidden within the charges of the product that you buy, and that price is currently set by the product provider, not you – the customer.
“These changes are not altering how much the advice should cost, but rather enabling you to agree how much the adviser gets paid rather than that decision being taken for you by a product provider.”
It adds: “The new charging system will not stop investors with modest means being able to afford financial advice. If you prefer, you will still be able to get advice without having to write a cheque.
“For example, you could instead agree with the adviser to have their fee taken from your investments; the difference in future is that you will agree with your adviser, in advance, how much you will pay for their advice.”
The FSA concludes by saying that consumers should be asking their adviser how much they are charging for advice, and states again that advice is not currently free.
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Readers' comments (37)
Alan Lakey | 3 Jun 2011 10:36 am
For some this may be true. But how about the millions who will lsoe access to advcie because it is too expensive to service their relatively modest needs?
What about the thousands of advisers who will depart because they are sick or regulatory interference and idiocy?
What of the providers who will not be able to function without volume and will close or merge with stronger providers?
If I was intent on decimating an industry and getting away with it (in the name of enfranchsing the consumer) I would have invented the RDR.
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Anonymous | 3 Jun 2011 10:38 am
Who are the FSA trying to kid.Every one in the industry knows that the consumer will pay more. Where does the FSA expect the extra costs involved with RDR to come from not their bonuses or redundancy paymentsthats for sure. Like always the FSA has no working knowledge of this industry. Just idiots trying to justify every thing they do
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Dave Hedge | 3 Jun 2011 10:38 am
what planet are these cretins on?
I had an enquiry form somebody wh had been told by the employer who was making him redundant that he needed to take independent advice about his group PP and a small residual pension elsewhere.
There is no way he can afford a fee, and I and the other advisers are not prepared to work for nothing. In the good old days, before we carried all the parasites at Canary Wharf in their ivory tower we would have sorted it out in half an hour, almost certainly earned nothing, but now we have to spend so long filling out the bludy compliance forms etc., he can't get the advice he needs.
Progress?!!!!!!!!!!!!
It's a shame the cretins don't read these blogs.
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Anonymous | 3 Jun 2011 10:39 am
One thing for sure - you do not consult a regulator for a successful business model. The regulator has decided commissions will be banned. Without a shadow of doubt this single move will eventually, and quite soon, destroy independent financial advice for the majority of people in this country.
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CONFFA | 3 Jun 2011 10:39 am
Is it any wonder that today's kids are leaving school unable to spell? How do you spell FSA? Answer = J.O.K.E.
(Admittedly the same could be applied to FIFA)
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Michael Fallas | 3 Jun 2011 10:40 am
Well I hope the FSA is prepared to back up those words and pay compensation if that is not the case out of their own pockets like the rest of us !
Oh I forgot they are protected under FSMA 2000 from any wrong doing so they can say what they like as they accept no responsibility or accountability.
With fewer advisors post RDR and FSA,.FOS and FSCS cost rising all the time I really fail to see how the cost of providing advice will not increase even more in 2013. Someone has got to pay the regulators to keep them in the lifestyle then have become accustomed to.
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John Blackmore | 3 Jun 2011 10:44 am
Today I can invest in an ISA and pay say 1.5% pa for a fund, 0.5% of which pays the IFA.
Post RDR I will still pay 1.5% pa plus any fee unless the FSA force fund managers to have new share classes, allow rebates or restrict the adviser to 0.5% pa
Given cost increases created by the FSA many advisers will simply take 0.75%, 1%, 1.5% pa or more.
Costs are almost guaranteed to increase. The FSA cure has become worse than the disease.
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Lee Birkett | 3 Jun 2011 10:48 am
I really would like to support the comments coming from our regulator, but hell may have to freeze over first.
The regulator will probably try and drive consumers to the £40 million FSA white elephant website that doesn't offer advice... and say this free service saves £400 million in commission payments, all for the benefit of the consumers...
They really are scraping the bottom of the barrel for some positive spin.
Lee Birkett
CEO
TrumpoMatrix.com
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Rod Leonard | 3 Jun 2011 10:56 am
Just goes to show that the FSA dosn't have a clue. When are they going to stop this stupidity of kidding themselves that they understand the consumer and what an IFA does for them!
I for one would be very happy to have a public open debate with Sants and the people who think up this rubbish. RDR stands for, in a nutshell.
Redistribution (to the banks)
Destruction (of a model that isn't broken and increased costs to the Industry and consumer)
Redundancy (of the older IFA's who have given decades of service to generations of clients and thier families.
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Greg Heath | 3 Jun 2011 10:56 am
I do wonder who writes the updates at the FSA and the circles they work in. Quite clearly there is going to be a restriction in access to advice. Its just that the FSA have not factored that in to their calculations so therefore in their eyes it does not exist.
I am Pro RDR on many levels but even I can see businesses changing their approach to clients and their profitablity in order to survive. That equals less access to advice for the average person and ultimately less competiton in the sector. Not a very good or wise policy I feel.
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