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Advisers slam Wheatley’s ‘sitting on hands’ claim

Advisers have reacted angrily after FCA chief executive Martin Wheatley accused the industry of “sitting on their hands” since the RDR rather than innovating to close the advice gap.

Speaking at the Lanson’s Future of Financial Services conference in London last week, Wheatley admitted the regulator’s simplified advice initiative has failed to take-off.

However, he claimed advice firms have been “waiting for the next step” to be laid out for them rather than developing new propositions.

The regulator has recently launched its Project Innovate initiative in a bid to drive innovation. Wheatley said: “One area I would include here as a priority is automated advice where we have seen some leaps forward in related tech over the decades but frankly not enough.

“The reason we launched Project Innovate is we have been very concerned that particularly in the advice sector there has not been enough innovation since we launched the RDR and there has been a lot of people sitting on their hands waiting for the next step.” 

M Thurlow & Co senior partner Blair Cann says: “No adviser I know has been sitting on their hands. It is complete nonsense and will just drive a wedge between the regulator and the regulated.”

Coast to Coast Financial Planning IFA Andrew Dawson says: “It is not our job to fix the advice gap. The regulator created the climate, now here is the weather.”

Responding to a question from Money Marketing, Wheatley said the regulator was trying to develop a “guided advice” space with less suitability obligations than full advice. 

He said: “We are trying to work out how you navigate between what is clearly advice, what is clearly not advice, what is self-execution and what is guided advice.”

Facts and Figures managing director Simon Webster says until the “crushing weight of lifetime liability” is lifted, progress will be slow.

He says: “You still have unlimited liability if it goes wrong because the FCA will not say this is approved and you can never be found liable.”

But Basi & Basi Financial Planning managing director Michael Basi says: “Wheatley is probably pretty accurate. The advice community has not been the most innovative.

“They are a lot like black cabs in many ways, change is having to be forced on them.”

Adviser views

Harry-Katz-700x450.jpg

Norwest Consultants principal Harry Katz: “Being an IFA is bloody hard work. I work a six-day week and put in at least 60 hours. On an hourly rate I earn less than a train driver.”

Susan Hill Financial Planning chartered financial planner Susan Hill says: “If I put people on to a D2C platform and say come back in 3 years and we will talk again I need to know that is compliant. How do we know until they tell us?”

Julian Stevens

Harvest IFM managing partner Julian Stevens: “Does “automated advice” mean decision trees? Been there, done that and it didn’t work. Who will be held accountable when the customer fails to use the decision tree process properly and makes the wrong decision?”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. The advice gap has been caused by the FSA and FCA banning commission entirely. If the had put a limit on the maximum commission payable by all companies sat 3% then the client would get advice and know that they were paying for it over a set period of time i.e. 3 years,5 years etc.I have no interest in offering advice to someone who has a small pot as one not economical for them to pay up front and not economical for me to earn less than a minimum to take into account all costs made by FCA,PII, Fccs etc

  2. That’s a pretty awful photo of me. I guess you could run a competition to guess what is out of shot to give me that scrunched up painful expression! (Nothing too rude please!)

    Perhaps MM could spring for a nice bottle of wine for the winner.

  3. Is simplified advice or automated advice the big white elephant in the room?

    Is the FCA’s fascination with this more to do with maximising profit for banks and insurance companies who are now struggling with the cost of full advice?

    Surely the answer to the advice gap is training and developing new people within financial services rather than trying to shortchange the general public.

    After all if you are ill you go to a doctor and if you want to get divorced you go to a solicitor, so why is it that if you need financial advice you have to go to a computer particularly when there are so many variables and the potential for mass mis-selling is the computer system gets it wrong?

    Have we not learnt anything from automatic sales processes? PPI? Anybody? Or even structured bonds. Yorkshire Building Society was fined £2.4m for their limited sales process that involved branch staff.

    I’m afraid simplified advice and automated systems seems to me just a way of politicians and the regulator trying to keep the big boys happy and maximising profit from the consumers without any safeguards.

  4. Julian Stevens 19th June 2014 at 5:42 pm

    Yes, that is an awful photo of you, Harry, even worse than the one of me (makes me look a right plonker).

    BTW, MM, I’m not the managing partner of Harvest IFM (even though I was when that photo was taken) ~ I’m (now) sole trader Harvest Financial.

    Mr Wheatley ~ WTF are we supposed to make of “guided advice”. Self execution sounds to me like suicide.

    And who’s that woman in the picture? She’s a bit too good looking for me to assume she works for the FCA.

    Established FCA procedure:-

    1. publish woolly guidance, open to a wide variety of intepretations.

    2. re-write parts of said woolly guidance when it becomes clear that no two people can agree on exactly what the regulator means or wants.

    3. reinterpret woolly guidance over time as various unforeseen outcomes, obstacles and problems emerge.

    4. Criticise everyone else for “over-complying” with woolly guidance.

    5. Express a murmur or two of concern about the advice gap (though Clive Adamson claims there isn’t one and Adair Turner says it was an inevitable side effect of the RDR).

    6. Make noises about a framework for simplified advice but without actually coming up with anything of which anyone can reasonably make any sense or within which they can have any confidence that it’ll be safe for them to operate.

    And to think this fireproof quango gets away with ripping off the industry to the tune of £600m a year. You have to laugh, otherwise you’d cry.

  5. @ Harry (caption)

    Headline; Local IFA found tied to a tree after a heavy stag night in the grounds of a nearby Abbey, the statement by the Mother Superior, reads -: the sisters were quite shocked to find a elderly man tied to a tree naked from the waist down on the way to their morning prayers, but happy that god had provided the squirrel inhabitants an early breakfast but also wondered if there was enough to go round ?

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