Sesame warns FSA may cause RDR "crisis"

Readers' comments (42)

• John Blackmore | 2 Dec 2009 3:19 pm

  I disagree. The FSA is not risking an advice crunch. We are way beyond it being a risk - it is now almost a racing certainty.
  
  Different studies give different figures but 20% or so of advisers have already indicated that they will leave or retire. Of the remaining 80% - some will fail. So pick a number - My gut feeling is that 30% will be close enough and for what purpose ?
  
  Higher qualifications will not help close the savings or protection gap. Very few people who do not save but should have complex needs. They need simple cost effective savings plans to be SOLD to them without unnecessary and costly advice.
  
  In truth the very existence of Regulation over the last 20 years or so has actually made this situation worse. If there is less mis-selling today than there was 25 years ago could it be in part because there is less selling.
  
  Unless the FSA take a time out we simply have fewer advisers gravitating more towards the High Networth end with those who need to save or require basic protection being ignored.

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• Glynn Jones | 2 Dec 2009 3:44 pm

  Surely, this Government wants the working class to remain at the bottom of the heap, to remain without aspiration, to remain Labour voters.

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• ian marsh | 2 Dec 2009 3:48 pm

  de ja vu!
  But this time we will see the demise of the source for many of the adviser of the future.
  Where will we get new blood from when there is little regeneration and organic growth?
  The basis of the development of educated advice is surely down to the attraction of the rewards for doing it,not the cost of doing it.Am I missing something when there is no desire to become a qualified adviser?

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• David Irving | 2 Dec 2009 3:53 pm

  I have long believed that the only eventual winners from the RDR will be the banks. Their advisers will have to operate to lower standards than IFAs (because they will be tied) and they will be the only ones with the critical mass to be able to cross-subsidise their advisers.
  
  IFAs will not compete with the banks on this playing field because they will not be able to on price, therefore the banks will have unfettered access to approximately 80% of the consumers in this country. We all know that bank customers receive expensive, poor quality advice. The RDR will force this on most of the population.
  
  It is the removal of factoring that will be the death-blow to fair, impartial financial advice from the IFA, not the increase in qualification standards.

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• mark dampier | 2 Dec 2009 3:55 pm

  couldn't agree more,few investors can afford or wish to pay fees so most will be excluded.Surely the real worry is that i don't see the banks squealing about it!!!

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• SIMON MANSELL | 2 Dec 2009 3:58 pm

  The FSA must be stopped before its too late. Ivan Martin joins a band of brothers:
  
  Otto Thoresen - CEO Aegon "The RDR is only helping wealthy customers"
  
  AXA April 2009 "We will lobby the FSA to make sure the RDR does not mean less are able to access advice"
  
  David Cox - SuuqeaMarch 2009 "Two million clients could be left without an IFA after RDR - 40% could leave the industry"
  
  FSCC January 2009 "Financial advice will be less widely available post RDR"
  
  Institute of Financial Services "RDR will impair financial advice before improving it"
  
  Alasdair Buchanan Scottish Life November 2009 "Sales advice is a real cop out and extremely confusing to investors"
  
  Stephen Gay - AvivaJune 2009 "The regulator has failed to consider the danger of adviser charging limiting access to advice for those on lower incomes"
  
  Lord Lipsey "Consumers in the middle (not high net worth or money guidance fodder) to be sold products by banks under the contradiction that is sales advice"
  
  Walter MerricksChief Ombudsman "I think it would be unwise to count on the assumption that complaints from the retail investment world are suddenly going to go down as a result (of the RDR)"
  
  Deutsch Bank reportAugust 2009 "There has been industry talk of 30% or even 50% if IFAs exiting the industry post 2012, which is not impossible"
  
  Paul Selly HBOS "Bancassurers set to benefit"
  
  Richard Howells Director Zurich LifeJune 2009 "The big question mark is still around what benefit it will have for the ultimate consumer.I am still not convinced that all of these changes, when you sit down with a consumer and explain them, actually give rise to a consumer benefit that I can really hang my hat on."
  
  Martin Lewis Money Saving Expert June 2009 "There's a worrying possibility that the FSA is about to kill off independent financial advice in the UK for all but the wealthy. I do hope I'm wrong. I'm not convinced most people will want to pay for advice. The commission route has the advantage that you don't pay a fee each and every time you want information; you can go without the worry of laying out cash. What I find most galling though is that bank-based advisers - those primarily responsible for PPI misselling, endowment mis-selling, investment mis-selling and generally poor advice all round are still to be allowed to be remunerated based on the number of sales."
  
  Janet Walford OBE, Editor Money Management Sept 2009: "I am not paranoid enough to believe that the FSA has a hidden agenda to do away with small IFAs, but the law of unitended consequences may well mean that this will be the result. This is especially the case when set alongside the myriad of other proposals that are costing some £430 million to set up, with ongoing fees of £40 million pa thereafter, a mind boggling amount of cash.
  
  Peter Hamilton barrister, Source: Money Management Oct 2009, Scrapping the FSA by Marie Jennings MBE: "The Financial Services and Markets Act does not permit the FSA to cancel an authorisation simply because the FSA has changed its views on what the appropriate qualifications should be….It is one thing to impose new rules for new entrants to the IFA profession, it is quite another thing to disqualify someone who is already qualified."
  
  David Hazelton of Tax Incentivised Savings Association(TISA) 30/10/09: The RDR could be detrimental to consumers both in terms of higher product charges and an increase in the cost of advice, warns the Tax Incentivised Savings Association(TISA). Implementation costs for the RDR are being "seriously underestimated" and product charges will consequently have to be raised.
  
  Bankhall managing director David Golder 03/11/09: "We say write to the regulator, write to your MP. Do not let the FSA get away with some of the things that will lead to the widespread decimation of our industry."
  
  Robert Kerr, head of retail distribution development at Scottish Widows says: The RDR could have the unintended consequence of "disenfranchising" the majority of consumers from financial advice . "Our key concern is the RDR proposals will act to drive advice upmarket, with financial advice becoming the preserve of the wealthy leaving mass-market consumers un-served,"
  
  Nigel Waterson Shadow pensions minister : "While no-one can object to raising the standards of training and competence, should an emphasis on exams take precedence over on-the-job training and experience? Is the 2012 implementation date practicable given the extra qualifications and changes in systems that will be required to be in place?
  
  SIMON MANSELL
  Temple Bar IFA Ltd
  www.templebar.co.uk

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• Anon IFA | 2 Dec 2009 4:05 pm

  These new exams are tough and it will take a lot of time and effort out to take and pass them and in a lot of cases re sit them. I certainly think unless the FSA start to listen they will do irrepairable damage to the independent sector which comprises mainly of self employed consultants who do not have the cushion of a nice salaried position in a bank who will pay for everything and give them time off to study!! Sesame are spot on here.

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• Anonymous | 2 Dec 2009 4:08 pm

  As IFA's we are a lot to blame for the situation we now find ourselves in. You only have to look at the mistakes of the past to see that. However I do feel that in more recent times we have cleaned up our act, we've had to. The banks are only there to sell, they are a business and have to make money. But, hey, are we not also their to "sell". Whether it be a product for which we get paid commission or whether it be for advice where we get paid a fee. We are still selling and the FSA need to understand that like any salesman we need to be remunerated for it.

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• Hugh Jeego | 2 Dec 2009 4:20 pm

  We are all missing the point here, the FSA will only be wound down once the banks have total control. Then all these rules and regulations will be relaxed to allow bank employed school leavers to advise the unaware population on how much completely unneeded cover they have to take out to get a bank loan. Just the same as Gordon removing advanced corporation tax for pensions 8 years ago, if The Sun cannot make a headline out of it the general public will be unaware of what has happened. We need to focus the media on this, Mail on Sunday to start with, give Mr Pest Ridge first go, then onwards towards The Sun. Headlines such as Finally Stuffed Advisers accompanied by a topless lady looking through the window of now closed IFA`s window should do the trick. Anyone game?

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• Anonymous | 2 Dec 2009 4:26 pm

  There will be winners and losers from the RDR which has more twists than a Hitchcock movie.
  
  The Banks have mass, are on high streets, business banking centres as well as on the internet and they are being heavily subsidised by the state to exist and will be winners.
  
  I wonder whether the rest of us who shall have to meet high standards will all be losers as this is a very gloomy synopsis.
  
  Should the FSA remove commission subsidisation from Protection policies then they are striking at ordinary people protecting their famillies. Such a move would be dickensian as most who need such cover are not without money issues placing famillies and individuals in unrequired poverty.
  
  
  As Michel Platini said when he was asked how he felt after Germany knocked France out of the World Cup 'the sun will shine tomorrow' and it did for Terry Henry.

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