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MPs frustrated with RDR trade body grilling

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Treasury select committee members have outlined major concerns about the impact of the RDR, with some expressing frustration about the way IFA bodies responded to their grilling.

Giving evidence at the committee this week, Aifa director Robert Sinclair and Institute of Financial Planning director of operations Steve Gazzard were scrutinised by MPs over the large number of complaints they had been getting from IFA constituents regarding the RDR.

Sinclair told MPs he believed the FSA had lost its way with the RDR. He said he agreed with the QCF level four benchmark but branded the “cliff edge” of 2013 to gain the RDR qualification as “unfortunate”. Gazzard said his membership had not raised concerns about the higher qualifications.

But MPs expressed concern that their answers were out of sync with the anger that they have felt from IFAs about the review.

Conservative MP Andrea Leadsom said: “This whole discussion this morning brings out my worst fears which is that trade bodies never really say what they think.”

Leadsom said she is concerned the RDR will lead to less people getting advice and saving for their future. She said: “You have a problem with some of these things but your message is not being heard, this is your chance to tell us what needs to be different. I wonder, are you actually taking it?”

Sinclair replied that Aifa has been making such points to the FSA for four years but they have not been listened to.

Gazzard told the committee that it was impossible to compete with the multi-millionpound budgets of banks and insurance firms’ PR machines.

Labour MP George Mudie challenged the pair directly over an older IFA in his constituency who is concerned about passing new exams.
He said: “Have you not any compassion for a fella coming to the end of his working life and you have stranded him?”

Sinclair pointed to Aifa’s work in developing an alternative qualification but suggested the industry was having difficulty finding enough work-based assessors.

Gazzard said: “We would be willing to consider workplace assessments but we rem-ain to be convinced they would test at an adequate level.”

Committee chairman and Conservative MP Andrew Tyrie said: “We are here to represent voters and consumers and you have sensed some frustration around the table that we have not had it quite as forcefully as we would like. We have all heard it ourselves time and again from the people you represent. They moan incessantly about the FSA, it seems as if a long shadow of the FSA is cast over here, muting your criticisms.”

Conservative MP Jesse Norman said: “What you have said, between you, over the past 45 minutes is that you acknow-ledge the RDR has cost four times what it should have cost, the consultation was poor and the initial ideas that it set out to achieve have fallen away.

“Does it not strike you therefore that it is frankly a bit of a fiasco as far as the retail investor and particularly the small investor who might use a commission-based broker?”

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Readers' comments (28)

  • Labour MP George Mudie challenged Aifa director Robert Sinclair and Institute of Financial Planning director of operations Steve Gazzard directly over an older IFA in his constituency who is concerned about passing new exams.

    He said: “Have you not any compassion for a fella coming to the end of his working life and you have stranded him?”

    I think we all now know the answer to that question, and its a resounding NO, I for one am quesioning my membership.

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  • I am at my networks annual general conference tomorrow and shall be questioning our membership of AIFA

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  • It's about time AIFA and IFP got thier collective heads out of the sand! Never mind the comment off Alan questioning his memebership soon these "trade" bodies won't have a trade to represent, or at least not with the critical mass to make it economically viable for them to continue?

    Over to you guys speak up or prepare for extinction!

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  • Has the AIFA actually consulted it's members about what stance they would like it to take in representing their interests- by ballot or other less "red" methods.

    They say the FSA does not listen to them, I suspect that is because under the previous regime, to shout out, loud and proud, was considered "rude".

    So much for good manners then!

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  • I am a mortgage adviser and not an IFA, but I have felt for a long time that AIFA and AMI were out of touch with the opinions of the advisers and that they were paying lip service to the FSA.

    Altough I am very grateful to the MPs for raising their concerns about the different realities experienced by the trade bodies and the advisers it is also a huge worry.

    I question whether the trade bodies we have today are equipped to continue working for us or whether we need to establish a new trade body. Time is running out, and we have to decide soon.

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  • Random thoughts on the RDR debate 20/10/10

    Several members of the TSC were also at the RDR debate 20/10/10 and contributed to an IFA positive debate. All in all the IFA was well represented until Mark (Rubber Stamp) Hoban MP got to his feet and lowered the tone of the debate especially by his refusal to take questions and of course his McDonalds attack.

    The McDonald remark was a well thought out and calculated insult! However, I seem to recall it was a burger that stuck in John (AIFA) Gummers throat following the mad cow incident so maybe Hoban will choke on his words too.

    As for the other MPs at the debate I would suggested that they would feel equally slighted at Hoban’s offhand refusal to take questions. I noted that Mark Garnier MP (TSC) was quick to suggest (and Harriet to agree) that a motion should be put in for a three hour debate! Maybe a three hour debate will give Hoban the time to choke on his burger and answer the many questions that he refused this time around.

    What a sad day for the Conservatives to have a minister like Hoban in such a position! he has more in common with the problem than the solution. Of course Hoban wants to rubber stamp RDR and for all this to die the same death as the IFA and a three hour debate would upset him.

    Finally, the TSC nailed AIFA to the wall over their failure to defend older IFA’s. Personally, I didn’t know AIFA were anti grandfathering. I wonder how many AIFA members were aware of that and are now happy to continue funding such views with their membership fees?
    It seems we owe very little to AIFA and PFS who have sold us down the river. It was interesting to see several members of the TSC at the Harriett Baldwin debate 20/10.

    The TSC is headed up by Andrew Tyrie author of The Leviathan at Large, the authoritative attack on the FSA and its is worthy of comment that Harriett helped Andrew in its production. It would seem that this powerful TCS is pro IFA and we must do what we can to maintain this – but no thanks to AIFA!

    Hoban is nothing more than an FSA spore trying to reseed itself and grow back once more.

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  • I believe the FSA has forgotten one thing when considering RDR: commission based advise for certain clients are the only method for those clients to pay for the cost of the advice being given.

    Providing advice to a client on the basis of a commission arrangement should be no different from advice being provided by way of a fee, the only difference being the cost of the advice under the commission arrangement, will be included within the product being recommended.

    Should the need arise for a client to need pure financial advice, with no product involved paying commission, then the advice can be provided on the basis of an agreed fee, with the said fee paid by the client.

    In summary, beit commission or fee based advice, the recommendation should be the same and the choice of paying for the advice should remain with the client and the FSA should not be allowed from a Human Rights point of view, to remove the commission option because this is restricting the clients rights.

    No doubt this will fall on deaf ears because it is the FSA making the rules!!!!!!!!!

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  • I think this denonstrates how spineless our trade bodies have become.
    Most IFA firms that have been around that long feel that they have been banging their head against a brick wall since 1986 and years of frustration have ended with us all just toeing the line out of fear of being kicked out of the industry.
    Yes there were lots of bad IFA's but most have now left the industry, but what we have now is over regulated IFA's who in the main work relentlessly for their clients, but we are continually reminded by what we see that the banks have little if any regard for their clients or regulation.
    It is clear that they are mearely working on the premise that if they can flog enough of any product that will have made sufficient profits to meet the complaints they factor in that they will receive.

    Banks should be barred from selling any financial investment product as indeed should any business that does not provide a review service. That way we will end up with firms that have a genuine aim of looking after their clients.

    Yes we want raised standards, but this should not be to the extent that the general public are disenfranchised from the advice process to to resultant higher costs as has happened in the legal profession, nor should we then have a situation where Banks can opt for a scripted lower level advice process that allows businesses like the banks to flog whatever they like.

    When is the industry going to wake up and smell the coffee. Our regulator has too much power and currently everyone is too afraid to say anything.

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  • The MP's are right, we are not making an impact because we are fighting on two fronts. Will ordinary people pay for advice? Answer NO. Should people pay for advice from someone who doesn't know an ETF from a QROPS? Answer NO. Drop the qualifications winge and we might start making progress on the real issue here.

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  • I left the CII Aifa the LIA years ago and supported IFADU the only honest voice of reason.
    Perhaps others will now.

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