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Alan Lakey: The RDR Titanic story

Titanic fever seems to have gripped the nation, or at least the media, and we have endured a barrage of connected and non-connected nonsense including themed crosswords and a plethora of TV programmes.

Karl Marx said: “History tends to repeat itself…the first time as tragedy, the second time as farce.” This gave me pause to consider whether in these frenzied times there might be a financial services metaphor suitable for this historic event. Why, there is, and you have probably got there before me.

Picture the scene – the camera focuses on Hector Sants, captain of the good ship FSA, sitting feet up while enjoying a glass of Rioja. Chief mate Martin Wheatley is similarly engaged while sending memos advising how best to stop irrational seagulls from making bad eating decisions.

The ship chugs ahead with the rudder fixed and the helmsman under strict instructions to leave the wheel alone. Crew members are becoming agitated as the ship moves through icy waters. Surrounding the ship are thousands of small IFA boats, many single or double-manned with their oarsmen waving frantically and shouting dire warnings.

The crew of RMS FSA leans over the rails to see what the noise is. “There is an RDR iceberg ahead,” shout the frenzied small boat owners. “What is that? We cannot hear you,” responds the crew. “It is a massive iceberg,” they scream, even louder. “You are heading straight for it, can’t you see it?” The crew chuckle at this and explain the ship is designed to cut through such nonsense as icebergs and, in any event, the captain has given strict orders not to be disturbed while he formulates future plans.

Just then, to the astonish-ment of the crew, captain Sants leaps into his readied lifeboat and sets off for sunnier climes.

Will this voyage end in tragedy? Yes, for some but not all. Those who regulate are unaccountable, except to their own consciences, and even then the alibi of collective responsibility can be used to deflect subsequent criticism. When we look back, it will seem so obvious, a bit like the dotcom frenzy, but will history reflect this failure of collective responsibility or will the miscreants be able to repeat Winston Churchill’s triumphant retort, “History will be kind to me, for I intend to write it.”

Incidentally, the inflation-adjusted cost of the Titanic is £694.9m, something of a bargain compared with the RDR.

An interesting phenomenon is the rise of the Nationwide Building Society in many people’s esteem. Now let me say I have always had a reasonable relationship with Nationwide but I also believe a return to rationality is in order.

Nationwide is lauded for its mutuality and commitment to members but this does not extend to its selling of protection products. I wonder how members will feel if or when they find out that they are being charged 30 per cent more for their Legal & General protection plans than clients of IFA firms and even of Barclays, which is similarly tied?

A visit to the Nationwide intermediary website also provides a bad taste. Among the many useful downloads and tools is the affordability calculator. This is designed, one supposes, to enable advisers to assess an applicant’s borrowing limit. Much information is requested, including date of birth, loan amount, etc and a loan figure is brough up, leaving the adviser and client with a degree of certainty about borrowing capability, right? Sadly, this is not the case. The affordability calculator spits out figures based on the assumption of a 25-year repayment term. So, when an application for a 15-year mortgage term is input, it can result in a decline and a waste of everybody’s time. Surely in today’s techno world, Nationwide can do better than this?

Alan Lakey is partner at Highclere Financial Services


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There are 30 comments at the moment, we would love to hear your opinion too.

  1. This article could have been written in 1912 for all the new insight it offers.

    RDR is happening. Get ready or don’t get ready, just please stop complaining.

  2. Julian Stevens 1st May 2012 at 10:12 am

    The FSA’s RDR may well be “happening” (as in being steamrollered through regardless of what anyone else may think or say), but just two of Alan’s points are:-

    1. that much of it may well cause more problems than it’ll solve and

    2. that the FSA refuses to negotiate with the industry on many key elements of it, such as that of commission i.r.o. top-ups to legacy products. Why, for example, won’t the FSA countenance Customer-Agreed Commission with a direct rebate of any excess?

    And why has Hector Sants jumped ship early instead of staying on to see through such an industry-transforming programme of change?

  3. I can’t believe MM is still publishing this stuff. The debate was over months, indeed a couple of years ago. Boring, boring, boring. RDR is coming in, right or wrong. IFAs will adapt as they have always done. let’s move on to something more interesting please.

  4. I suppose it depends on which waters you choose to sail in, and whether you have lashed yourself to the mast of a none iceberg ready ship?

  5. Soren Lorenson 1st May 2012 at 2:34 pm

    What happened here? Did half of two separate articles mistakenly get published together as one?

  6. That was a really disjointed transfer from an ‘RDR titanic’ to Nationwide, I re-read it several times thinking I missed a paragraph. Not sure what point the article is trying to get too?

  7. I think, a clever piece of comparison Alan!

    Sounds like a few of the “I’m all right jackers” object to it, but like I have said before, the “I’m all right jackers” will eventually see the point, when they cannot get PI insurance or the costs of financing the FSA and the FSCS gets even more ridiculous!

    I can only think the “”I’m all right jackers” think they are in the lifeboats with Mr Sants and the other first classers!

  8. I assumed that Hector left the FSA so that he could elect for Fixed Protection of his FSA pension benefits. Perhaps I was wrong?

  9. Time to move on the industry has changed so change the record

    I am more interested in what happens after 1st Jan to my firm and customers.

  10. Sounds to me like a few on here are acting like Turkeys voting for Christmas !!

    Either that or as Mike said are already in the life boats – hope they dont capsize due to too many jumping on their boat !!

  11. Hector may well have left the scene of the crime, but his DNA is still there for all to see.

    Justice will catch up with him one day!

  12. Alan makes the point very well ….. get rid of the IFA and allow the larger institutions to make money for themselves whilst ripping off the public as they do not have an adviser to smooth the rough crossing! those that accept the RDR boat now, will one day see the bigger picture when they are annialated as IFA’s!
    Who suffers most beside the IFA, the Public at large!
    As for the people above who are bored with the reporting of RDR and the bad ship FSA it seems to me you are happy to see clients ripped off, I despair at your lack of understanding!

  13. I think it is everyones responsibility to ridicule Sants and his legacy on a daily basis.

    How ironic is it that those that do not have a problem with RDR cannot grasp the reason for the article proving beyond any doubt that common sense and exam taking ability are not bed fellows.

  14. Larry in London 1st May 2012 at 4:10 pm

    @Anonymous | 1 May 2012 9:31 am

    RDR is the biggest state imposition on commerce for decades. It flies in the face of common sense, denies consumer choice and will ruin thousands of businesses – and for what benefit? The foundations of it are hidden in mystery — just what were the qualifications of those who deemed it so necessary. Probably none!

    First they came for the communists, and I didn’t speak out because I wasn’t a communist.

    Then they came for the trade unionists, and I didn’t speak out because I wasn’t a trade unionist.

    Then they came for the Jews, and I didn’t speak out because I wasn’t a Jew.

    Then they came for me and there was no one left to speak out for me.

    Alan is perfectly correct to make the point – if good people do nothing we all know what happens. Keep speaking, Alan. Those that have an ear are hearing you loud and clear. The FSA ignored our democratically elected representatives. We have to keep speaking. That is what freedom is. The freedom to speak and think for ourselves – and not have to submit to faceless, unelected bureaucrats.

    This isn’t about the RDR anymore, it’s about freedom and what it means to be free. Government should get out of the way of business. The man with the red flag walking ahead of the motor car went away years ago – only to turn up in Canary Wharf 100 years later.

  15. I dont think that the “alright jacks” are saying they agree with RDR – they are saying that they have seen it coming for a while now and have adjusted their businesses to cope with the changes.

    The point they are trying to make is that this article might have been an interesting read a year ago, but the doom and gloom story is a bit old hat. RDR is coming so deal with it – dont complain. I agree with this mentality.

    MM is an Alan Lakey and Tom Baigrie PR site anyway – just a shame alan has written such a lame article. 1-0 Tom

  16. At the end of the day we IFA’s are riding a bike with a buckled front wheel (we all know things arn’t perfect), however come 1st Jan 13 the FSA are going to force us to change it for a square one, in vain hope to stop us hurting ourselves or more importantly anyone else.
    More to the point the people who think RDR is a HUGE oppertunity are deluded how many times have we heard that one ? every time a crap piece of legislation comes out, the spin doctors label it a HUGE oppertunity !! please dont let yourselves fall for it.

  17. Knowing some of the regional directors of regulated sales within Nationwide and their background nothing surprises me about this.

  18. Those of you that say stop whinging and get on with RDR will they still say the same next year when something else gets steam rollered in and more people lose their jobs and we all get further stressed. Once you become regulated it is a fact that the regulators are constantly justifying their existence at who’s expense?

  19. Excellent article …. both halves made absolute sense, and made their point very clearly. Astonished that the “I’m alright Jack’s” actually wrote things like “it’s happening stop complaining”. Such thick skins on people so short-sighted. Best comment by miles Steve P : I think it is everyones responsibility to ridicule Sants and his legacy on a daily basis.

  20. I think the stated aims of the RDR are laudable


    Let me balance this with the real world.

    I think communism is a wonderful idea and yet I know, like the RDR it doesn’t work!

    With communism I was willing to put my life on the line with 50k other members of the Territorial Army between 1984 and the end of the cold war.

    At the moment, I feel like we have communism lite via the F-pack and I am up for a fight.

  21. steve jenkinthwaite 1st May 2012 at 7:31 pm

    Don’t usually respond to these things but… If half the FA’s leaving messages on here and also those who spend countless hours recanting the good old days (assumingly when with profits bonds showered their holders with stratospheric returns and the only life insurance sold was to provide for a funeral) put as much effort into speaking to their clients or heaven forbid try to acquire new ones (appreciate this may be a little forward thinking for most – believe its termed blue sky thinking) then I think they would be a far more successful bunch and potentially even profitable. It is possible peeps… I think it was Dolph Lundgren, the famous German social commentator who said ” adapt or die ” – well I for one Dolph agree with you, there’s a lesson in there for all of us.

  22. To Peter Herd | 1 May 2012 3:01 pm

    Thats the point

  23. Soren Lorenson 2nd May 2012 at 10:48 am

    Personally I believe that the iceberg is the FSCS rather than the RDR.

    Look at the news elsewhere about Merchant Capital.

  24. Surely anyone can respond to this blog, it’s a free world? Perhaps the “I’m all right jackers” are starting to get wet feet in the lifeboats.
    Or maybe just too much wind in the life jackets…

    But seriously judging from some of the comments on here you can see why we will never have a collected body.

  25. My view on the RDR is that, in general, the requirement to achieve higher qualifications is admirable – and people have been given a long time to achieve this. However, the abolition of commission in all its basic forms will be a disaster. The effect will be to disenfranchise the majority of the population who just will not pay for financial advice.
    As for Nationwide??? is the author of the article paid by column inch?

  26. @gaaza

    Only wish i was paid at all, mate.

  27. Hector strikes me as having much more in common with the captain of the Concordia than with Captain Smith of the the Titanic. Captain Smith was prepared to go down with his ship, the captain of the Concordia was the first into the lifeboat looking to save his miserable skin!

  28. When the Iceberg hit the ship, the owners had full confidence in the design and that the ship was unsinkable. Look where that belief got them.

    As with RDR, the future of IFA services for the mass consumer market, which sustains the financial markets incidentally, is bleak. Many will leave, be put out of business by the increasingly unaffordable costs of supporting these unaccountable nut jobs and the nation will be the poorer for this. The trouble with RDR is that there is no plan B if Plan A fails to achieve better consumer outcomes and higher professionalism and ethical behaviour for advisers.

    RDR is not about increasing professionalism, cutting out commission bias or any of the other misleading statements issued by the regulators, it is about destroying the only sector of this industry which has in the past been responsible for growth of investment and savings and protection.

    The debate may even be over, as one contributor put it, we may even have to suck it up, man up and soldier on, but the unpallatible truth is that those who were charged with regulating the industry and protecting consumer interests and maintaining confidence in the financial system have so royally screwed up, there is nothing positive to look at about the imposition of a system which effectively disenfranchises 100’s of thousands, if not millions of consumers of financial products and will do nothing to incentivise consumers to save for a comfortable retirement.

    The recent crisis in the Eurozone only adds to this mess.

  29. Now that Peter Smith has launched his own personal lifeboat we are in even more turbulent times.

    Smith was the guy who when asked what would they do if the RDR didn’t work, came out with the immortal line, “We’ll have to think of something else”.

  30. For me, the idea of all advisers achieving level 4 is a good thing. Its commands more respect for us as advisers on the whole. As for charging fees, i just cant see how it will work. More importantly, but for a few, there was nothing wrong with the current/soon to be old model – commission. Maybe cap it at 4 plus 0.5?
    Oh well, we shall see what happens next year. Im just signing up my personal income protection policy in case….

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