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Andrew Tyrie letter slams FSA RDR dismissal

Treasury select committee chairman Andrew Tyrie has written to FSA chief executive Hector Sants describing the regulator’s rapid dismissal of the committee’s recommendation to delay the RDR as “unacceptable”.

In the letter, sent yesterday, Tyrie says: “You will be aware that last Thursday the FSA circulated an embargoed response to our RDR report, rejecting in a peremptory manner our recommendation of a one year delay to the RDR’s introduction. This was issued within hours of the embargoed copies of our own report being distributed.

“The committee has discussed this. We deprecate the Authority’s action. It was precipitate, giving the impression that no adequate consideration had been given to the arguments for the delay we recommend. This is unacceptable.”

In this week’s Money Marketing, Treasury select committee members attacked the FSA for showing “arrogance” and “contempt” for the committee in swiftly dismissing its recommendation that the retail distribution review should be delayed.

The TSC’s report on the RDR, published over the weekend, calls for the January 1, 2013 implementation date to be delayed by a year to give advisers more time to meet the QCF level four qualification requirements, alongside a softening of the cliff-edge deadline for experienced advisers.

The FSA released an embargoed response alongside publication of the report which rejected the MPs’ key recommendations and stated it is committed to the January 1, 2013 deadline.

Labour MP George Mudie says: “Accountability is a hot issue at the moment and this is a case in point. We put a considered view to the FSA and, without much thought and with some arrogance, it pre-emptively told us where to go.”

Conservative MP Andrea Leadsom says: “It is astonishing the FSA would rule it out of court when it was a very strong recommendation and pretty disgraceful that it would get its retaliation in before the committee’s paper was officially published.

“It shows real contempt for the considerable work that went into the report and it is a complete two fingers up to the committee.”
Liberal Democrat MP John Thurso says: “Maybe it shows that seeing as the FSA is disappearing it has decided not to bother too much any more.”

Conservative MP Mark Garnier says: “The FSA has had a look at the report, shrugged its shoulders and said it is not going to bother with it and banged out a press release in response without even letting us know first. It is pretty unimpressive.”

Labour MP Andy Love says: “We were trying to find a proper balance between the needs of consumers and the difficulties some IFAs are facing in meeting the requirements. I was surprised at how quickly the statement came out but I would hope they would give some consideration of the points we were trying to make.”

The FSA has yet to respond fully to the report but Cicero Consulting director and chief corporate counsel Iain Anderson says the quick response sends out a deliberate message. He says: “The FSA has tried to kill the TSC’s recommendation dead but I do not think it can. The opposition will pick it up and there have been a lot of Conservative backbenchers interested in this.”

Labour Shadow Treasury financial secretary Chris Leslie says the FSA’s rebuttal of the committee’s recommendation is “unsatisfactory”. He wants the regulator to show there will not be a shortage of advice after the RDR.

He says: “If the regulator does not do that, we will be asking questions of the Treasury to explain what it is doing to counteract that reduction in advisers. It might well be that we look to table debates on it, but even ministers are hamstrung in what they can do to affect regulators.”

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Comments

There are 22 comments at the moment, we would love to hear your opinion too.

  1. Why should the TSC be any different to the rest of us?

  2. Only now are the politicians finally waking up to what they have created.

  3. Unusually, I agree with the FSA on this one. I am quite new to the profession, and have passed the level 4 exams. I question whether anybody who has had getting on for three years to achieve this qualification deserves an extension of time, or even whether they should be giving advice at all if they are incapable of passing the exams.

  4. CHARLES HENDERSON 21st July 2011 at 10:14 am

    The Select Committee’s request to delay RDR for a year is reasonable. If RDR is implemented on 1 1 2013 there are bound to be many more advisers, some very experienced, leave compared with the number leaving at 1 1 2014. So clients will suffer. FSA say they announced the deadline some time ago but FSA took a long time to finalise the rules.

  5. What I find really frustrating about the RDR, is the fact that I could be forced out of a job because I have not passed exams in areas in which I do not provide advice on. On top of the 16 Years experience I have in the area I advise on, I have passed the relevant exam in which I specialise. If there are areas in which a client requires advice on, I pass on the enquiry to a colleague who is suitably qualified. It’s simple, if you have not achieved the exam in the area you haev been asked to provide advice on, ytou cannot prvide the advice, it’s not rocket science.

  6. I’m actually pleased that FSA have reacted in this way, it shows the true pomposity and arrogance of this organisation. Heads up MP’s this is what most IFA’s and financial services in general have been dealing with for a long time.

    Will elected MP’s open up a can of whuppass on this organisations bottom!!

  7. Whilst being no fan of the FSA, I can understand their immediate dismissal on this occasion.

    5 years of preparation and countless reminders as to their inflexibility should suffice by now. If further research obviously shows that consumers can benefit from a 1 year delay, it is bound to show they will benefit from another 5 year delay, let alone a complete abolition of the RDR.

    So you can understand the FSA saying “enough is enough, we are serious when we say go and get qualified to the level we expect”

  8. Financial Advisors have long suffered because they do not have a collective voice, such as the Law Society for Solicitors. This has left them open to being used as a scape goat and a bottomless pit of money when the FSCS and FSA decide to take money from us for the failure of providers such as Key Data. The FSA has got so used to abusing us that they felt they could disregard the Treasury Select Committee’s views out of hand. Lets hope the TSC realise the FSA’s contempt is primarily aimed at those who pay their inflated wages – the financial advisors.

  9. anonymouse 10.13
    Will you still feel like that if you are forced to re qualify 3 years before you are due to retire?

  10. Unfortunately the TSC missed the point, they were blinded by all the complaints about qualifications instead of focusing on some genuine reasons for a delay. The FSA must have been mightily relieved when they read the TSC report. The one thing that has been constant is the the need to demonstrate your knowledge, so why make this the main justification for a delay? Yes the FSA have shown arrogance in their preemptive response but the industry and the TSC shot themselves in the foot I’m afraid in my humble opinion.

  11. If we can’t delay the implementation of RDR by a year perhaps we can accelerate the disbanding of the FSA by a year !!

  12. I got my Diploma on 2008 having realised in 2007 that it was required….. i worked hard and crammed it into my working regime…. so if i achieved it why havent others…. bottom line is that we have had plenty of time and there is no excuse.. i am not an RDR fan but dont see why 4 years hasnt been enough time… how long do you want to read 4 workbooks and do an exam…

  13. I wouldn’t mind betting that all the smug little sods that are crowing about getting their exams already are junior little wet behind the ears advisers with about four minutes of client-facing financial services experience but with a degree in medieval art or media studies.

    My problem with the exams is simple – I only advise on pensions, my business only advises on pensions, my clients only expect advice on pensions so why the hell do I have to sit crap exams testing my knowlwdge on protection, mortgages, etc.

    I actually sat the tax exam and passed it with less than two hours worth of revision which actaully makes my blood boil.

    I don’t claim to be especially talented so what’s the point of making me sit exams which are so simple that they can be passed with minimal work.

    I’ve been through all this before and I will tell you that these exams will count for sod all – so that all the interested parties can keep their cosy little jobs and fat pensions another round of exams will be dreamed up within three years.

    As for making any difference to the advice the client receives don’t make me laugh.

  14. Another Pissed Off IFA 21st July 2011 at 11:25 am

    The Brown stuff (deliberately capitalised) is about to hit the air conditioning.

    Don’t ya just love it?

    @James: Hi, Some people will have got on with the qualifications promptly, others less so. Some people just take their driving test whilst others do the Institute of Advanced Motoring qualification but all drive. So what is your point?

  15. Another Pissed Off IFA 21st July 2011 at 11:29 am

    The real problem with RDR is that it is all stick and no carrot.

    If there was a regime in which more qualified advisers were able to enjoy less intrusive regulation, lower fees and so on normal market forces would take care of all of this.

    Instead, we have unaccountable paper-pushers interfering with business and denying consumer choice.

    Dreadful. Truly dreadful.

  16. Dominic McLoughney 21st July 2011 at 11:39 am

    I feel the TCS has missed the point here. The issue of qualifications is only one of the problems facing IFA’s in a post RDR world. In fact I feel it is probably the least of the issues. I have been working towards level 4 for the past 2 years and am very nearly there. With the introduction of the RO exams, (which I feel are a poor substitute for the JO exams) advisors can now gain instant results and as such can qualify in far quicker time. I honestly believe that the exams are a great thing for the professionalism of the industry and that we have had ample time to complete them. I do feel sorry for older advisors who will be out of practice on examination technique, however they are not rocket science and someone who has the ability to shape individuals lives with their advice should have the knowledge and intelligence to pass them. The bigger issue is that of capital adequacy and independent status. Had the TSC focused on these areas I feel the argument would have held far more weight for a delay.

  17. Well done FSA. If you can’t pass the exams (which let’s face it aren’t rocket science) then how can you profess to know your subject and advise appropriately. Experience alone is insufficient…I’m sick of undoing the mess client’s have been left in by poor advisers, probably the ones who are complaining about having to take exams and asking for a delay. Why delay? are you all struggling to sell your practices? Haven’t you got time to inflate your renewals ready for retirement ? Need another year to do a bit more churning ? Those that are worth their salt remain quiet, confident that very soon a lot of bluffers will be out of the industry leaving those that can cope with holding the required knowledge to get on with it. Those that are struggling…get revising instead of wasting time complaining, RDR hasn’t just appeared from knowhere has it? It’s about time advisers from all sectors, IFAs / Tied / Multi-tied were made to prove they deserve to be where they are, not just on ‘sales’ figures but on knowledge also. Well done FSA, for once.

  18. I cant understand why advisers are jumping on the bandwagon and now opposing a one year delay in RDR implementation. These are the people who no doubt have already made the road to or achieved level 4 qualification, but for some advisers they are finding it more difficult to jugle all the requirements that are put on their daily lives whilst still trying to run a profitable business. When RDR was first mentioned we never thought there would be a global financial crisis. This has had a financial impact on advisers businesses with regards to overall profitability. This has created very difficult and challenging times for everybody, therefore a one year extension on the implementation in my mind is not such a bad idea. The reason why the CII and other accredited bodies are opposing an extension is that their revenue streams for examinations will be affected. I think that the TSC will have to put their tails between their legs and accept that the Quango that they and their fellow member politicians created will rule, no matter what !

  19. NOW, all you parliamenatrians out there, are you going to let the intellectually bankrupt sants ( won’t even dignify him with a capital ‘s’), walk all over you and your generally well balanced TSC report.

  20. To Mr or Ms Anonymous | 21 Jul 2011 10:13 am.

    You say,

    “I agree with the FSA on this one. I am quite new to the profession, and have passed the level 4 exams”

    You are obviously a “Blue Sky Academic sort of person” who has never run a business and has no concept of real life, try running a business, having a family, and then have to requalify for a job you have done for 27 years, giving great home service to normal working class people.

    Without us more experienced home service IFA’s the Man in the street would get no financial advice at all!!!

    Remember that when looking down from you Ivory Tower and remember it again when you fall from it and are looking up and then realise Academia is no replacement for hard work.

    P.S. have the guts to print your name, I have!

  21. anonymous 10.13 here, and remaining nameless for fear of being lynched! Outnumbered anyway!

    Paul Hudson & others, I am new to this profession, 55 years old, and embarking on a second career. Previous qualifications – 4 GCEs. Hardly an academic!

    Plenty of experience of the real world – all the scars and bruises to prove it! Had the family, run the business, and sold the Ivory Tower when last made redundant!

    I still maintain that if people however old cannot pass relatively easy exams in the subject of their profession for the past many years, there is something wrong. I don’t buy this ‘I only do pensions’ stuff either. If you are too thick to pass a basic qualification, you are probably a liability to your clients.

  22. Will this develop into a case of Tyrie vs. Tyranny? I hope so and that, as part of the process, the necessary legislative changes are enacted to bring the FSA to heel.

    That having said, a legal statute already exists in the form of the Statutory Code of Practice For Regulators, from which the FSA has granted itself a unilateral opt-out, so why isn’t the TSC pressing forward on the strength of this?

    The Regulators’ Compliance Code is a central part of the Government’s better regulation agenda. Its aim is to embed a risk-based, proportionate and targeted approach to regulatory inspection and enforcement among the regulators it applies to. Our expectation is that as regulators integrate the Code’s standards into their regulatory culture and processes, they will become more efficient and effective in their work. They will be able to use their resources in a way that gets the most value out of the effort that they make, whilst delivering significant benefits to low risk and compliant businesses through better-focused inspection activity, increased use of advice for businesses, and lower compliance costs.

    Of all the recent mis-selling scandals to have emerged in recent years, how many are attributable to lack of qualifications? Of all complaints referred to the FOS, how many are attributable to older, experienced advisers with stable, long-established businesses and few or zero complaints? Has any convincing Cost:Benefit Analysis for the RDR been produced? Manifestly not, given that the original cost estimate of ‘only’ £600m has since sky-rocketed to between £1.4 and £1.7Bn, whilst the benefits remain intangible (which isn’t to say there aren’t any). Meanwhile, the FSA refuses to discuss the pending collateral damage of advisers (qualified or otherwise) leaving the industry because it’s become simply too toxic and oppressive an environment in which to try to make a decent living.

    I spoke the other day to a former IFA who, although in his new job is earning less money than before, reports his quality of life to have improved immeasurably. Basically, when he gets up in the morning, he no longer has to worry about the latest edict/brickbat from the FSA to make his life more difficult and troubled. So he’s out and very glad to be. Many more will follow.

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