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Advisers hit out at Govt and FCA over FAMR proposals

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Advisers say the FCA and Government have missed an opportunity to make truly radical changes in their joint review of the advice market.

Earlier today the long-awaited Financial Advice Market Review was published with recommendations including amending the definition of advice and allowing consumers to access their pension pot early to pay for the cost of advice.

But advisers have been left disappointed.

Informed Choice executive director Nick Bamford says: “Does this change anything? Changing the definition of advice, maybe reviewing how the FSCS works and using your pension to pay for your advice. Am I missing something?

“Everytime there’s a chance to do something radical and really shake up how people do things it is missed. We want something radical, this is a consultation basically saying nothing.

“The bit that really irritates me is they say they are reviewing the FSCS but we are going to get our levies and we’ll be paying tens of thousands and I bet we’ll still be having this conversation in March 2017.”

In addition, the FAMR flatly rejected the idea of a fixed or variable long-stop after finding “relatively few complaints” relate to advice given 15 years ago.

Rowley Turton director Scott Gallacher says: “I consider this somewhat twisted as by the same logic the FCA are saying that if advisers only had a higher number of complaints over 15 years old then they would have considered the long stop appropriate. It’s the classic Catch 22 that we always seem to be in.

“The additional part of the FCA’s argument against the long stop for IFAs is the long-term nature of some financial products, but are these any more long term than other professional services such as wills, medical, or even architecture?”

One of the headline recommendations is expanding the current model of adviser charging that restricts money taken out of a pension pot being used for advice on broader areas.

But Wingate Financial Planning director Alistair Cunningham thinks this leaves the system open to abuse.

He says: “I like the way the system works presently because it is less open to abuse. If I tell a client don’t worry I’ll take the fee for this bit of work out of your pension over here that doesn’t feel right. It removes the link between the advice you are giving and the fees you are charging.

“I have no issue with the current model of adviser charging where each pot picks up its own tab.”

Highclere Financial Services senior partner Alan Lakey adds the regulator’s focus is wrong.

He says: “The most obvious thing that FAMR misses is that they still don’t get the fact that the more people advisers talk to, the more products are purchased.

“And the more advisers are able to speak to clients rather than dealing with paperwork the better. But it’s the horrible compliance and regulation aspects that inhibit us, and this does nothing to address that.”

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. The problem with Alistair’s argument is that retirement advice covers many areas of advice and you cannot simply take money from on pot just to pay for advice related to that area especially when there is no money to be taken from other areas. This is especially true for those firms that charge hourly or indeed give fixed fee advice. And look at it from the client’s perspective – it is my money and I should be able to spend it how I see fit.
    Our submission to the FAMR pleaded for better engagement with advisers because as Alan say, clients are more likely to get better, tailored and appropriate advice. But it has fallen on deaf ears.
    As for the FSCS levy – I think MPs and Regulators should walk in our shoes. Reform of PII and risk rated fees just will not hack it. And the idea of access to funding to help us pay for these fees – that works wonders for CA and besides it still has to be paid out of my pocket. A product or advice levy is the only fair way.

  2. @ Alan Lakey. I’m with you on that 100% and that’s what I included in my tupence worth in this charade. If only a lot more would have done we may have had other issues to talk about.

    So all those that didn’t respond don’t talk about it as you didn’t do it!

  3. This has been a truly missed opportunity to make some really positive changes for those who use advisers and for advisers themselves. However true to form they “speak” for 87 pages and really say very little in terms of how to build a better advice sector. Still should we really have expected anything else?
    There is virtually no difference to the time the advice process will take nor is there likely to be any regulatory costs (direct as well as indirect) for us or clients. Tracey McDermott admitted recently the RDR has pushed up costs significantly and reduced very experienced adviser numbers dramatically, yet there is nothing in the 87 pages to demonstrate how these costs can be dramatically reduced. On one hand we have a regulator saying “As a direct result of our policy and rules, the costs of advice have significantly increased advisers costs whilst reducing accessibility of professional advice to many people”. And on the other hand, the same regulator has not said anything solid about what they could look at to reduce this. It is pathetic, truly pathetic

  4. Honestly I depressed myself for two hours yesterday reading the “final report” It really came up with nothing that is going to do anything substantial about the “advice gap” or “capacity crunch” if you prefer.

    Loads of recommendations about what various bodies shoud do with out any SMART measurements of goals and objectives. This has been a complete waste of time and energy exactly what most of us expected from this Treasury and FCA panel.

    Best mark I can give it is C- I’m afraid

    • I felt the same Nick. FCA were in my opinion totally disengenous in their dealings with the APFA Longstop working party and it looks to have been a backroom boys stitch up on everything.

  5. Douglas Baillie 15th March 2016 at 12:36 pm

    As far as taking a ‘fee’ from a consumers’ pension fund is concerned:

    Please be aware of a recent FOS adjudicator’s determination:

    “because the (adviser’s) fee for advice is coming from the consumer’s pension fund, the adviser is therefore biased and is not independent. This is because the adviser’s remuneration is wholly contingent on a switch or transfer taking place”

    You have been warned that the FOS is accountable to nobody except itself.

  6. It’ll be a bit like the government’s scrapping and replacement of the FSA ~ in two or three years time, they’ll realise that things have become worse, not better, because nothing of any real meaning or relevance will have been done. The cards will have been shuffled, the deck chairs rearranged and some grand pronouncements will have been made but, in the end, it’ll add up to nothing of any real practical value at all.

  7. “Missed opportunity” ? was there an opportunity for the general IFA in the first place ………

    Like many, in the dark recess’s of my mind, I hoped there maybe some much needed change…….alas I knew it would be a whitewash and probably ended up with a scenario even worse, form where we were !

    Short of driving a railway spike through the head of reason and common sense at the FCA and treasury, we are the poor relation who will never get invited to the party ! (but we are made to pay for the champagne)

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