MM leader: Scare tactics need to stop
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With the RDR consultation process closing last week, the industry had one final chance to convince the FSA of the merits of their various causes.
Despite the RDR already spanning well over three years, there is still a huge amount up for grabs for the various competing interests who have all submitted new responses to the regulator.
Heavy pressure is being applied on the FSA by the banks and insurers to reduce the qualification requirements for certain tied advisers down to QCF level three. They argue that those advising on a limited range of products through a simplified advice process do not need the same qualifications as other advisers.
A justified criticism of the last RDR consultation paper was that there was a gaping hole on how to service low to middle-earners, apart from a last- minute decision not to scrap basic advice which appeared more the work of the Treasury than the FSA.
But looking back at the way that the banks in particular have behaved in recent years, for instance, on certain structured product sales which could well have fitted into their definition of simplified advice, the big concern with watering down qualification requirements is can the banks be trusted?
One important development from the consultation process is the Personal Finance Society giving its backing to work-based assessments as an alternative to examinations.
For too long, the FSA has ignored the many industry voices who have campaigned for genuine work-based assessments as an alternative to examinations. The regulator has been concerned about whether an awarding body would be willing and able to draw up and conduct work-based assessments. Hopefully, the detailed PFS proposals will allay their fears and offer a solution to many advisers unhappy about taking examinations.
Perhaps of most concern at present is the worry that the FSA is preoccupied with sounding and appearing tough on all issues. This political posturing may make them a few fair-weather friends in the media and Parliament but could do massive damage to the industry and consumers.
With little over three years until the RDR deadline, huge efforts are being made by the majority of advisers to meet the expected requirements.
The FSA should be doing more to encourage advisers to upskill rather than focusing all its attention on scaring the industry with arbitrary deadlines.
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Readers' comments (2)
Phil Castle | 5 Nov 2009 1:43 pm
A well written article. Thanks.
One problem is that Hector Sants comment last year (?) be afraid, be very afraid wasn't said with any thought about the consequences of saying this to people (while not being to clear who was meant to be afaird). There are two reactions to fear, fight or flight and Hector Sants is now reaping what he sowed as some adviser say they will flee the FSA and others say they will fight.
A more concilliatory approach and one where advisers thought that the RDR and (in my case the Consumer responsibilities paper) were true consulatations might be a start.
There are clearly significant oppossing camps even in the advisroy sector and even when/if someone tries to suggest something which might be an acceptable compromise (as with my firms aim to have a Client Agreement which DOES make clear Clients rights and responsibilities as well as ours), the FSAs reaction is to issue threats and refuse to discuss finding something which may be workable.
There needs to be more clearer stated aims at the FSA so that individuals at the FSA can be measured against them and if found wanting, SACKED.
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John Blackmore | 8 Nov 2009 10:47 pm
The Banks are quite correct in suggesting QCF level 3 for those selling simplified products. I'm not sure though that they would like the price that would need to paid to allow this - Product Regulation.
There is a very limited market for complex Independent Advice and this market really should be dealt with on a true fee basis and only by those who have QCF level 6 or better.
The rest of us should simply be restricted to selling or advising on products which have been regulated and found acceptable for the mass market - products which although not ideal are unlikely to do any great harm.
So rather than throwing out 30% or more of the industry in just over 37 months advisers should be allowed to take their time to pass relevant exams in areas that they would like to develop. Makes far more sense than requiring everyone to pass papers in "supervision"
QCF level 4 is not demanding enough for real Independent specialist advice and is at the same time far too demanding and unnecessary for the vast majority of sales/advisers.
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