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Backbench MPs continue attack on the RDR

Backbench MPs have continued to express deep concerns over the impact of the RDR in a debate in Parliament this morning.

The Westminster Hall debate, secured by Conservative MP Harriett Baldwin, had 13 MPs speak to support of constituent concerns about the RDR.

Baldwin said the RDR is likely to reduce access to finance in rural areas and hit sole trader IFAs hardest.

She said: “In London, for access to financial advice it does not really matter if one person goes out of business there will be lots more financial advice available but in rural constituencies it will have a significant impact.”

She added: “Experienced IFAs, who are often sole practitioners are going to find it hardest to take the time required to pass these specified exams.”

Baldwin said that this was the first time the regulation of financial advisers has been debated in the house of commons. “You have to ask why,” she said.

Other concerns raised during the 30 minute debate included the cost to consumers and the reduction of access to advice for smaller investors.

Treasury select committee member and Conservative MP Mark Garnier asked Baldwin to work with him to secure a backbench business debate so the issue could be debated in the main chamber.

Treasury financial secretary Mark Hoban said members should support the objectives set out by the RDR.

He said: “The current minimum financial adviser qualification is at the same level as a diploma in shift management offered by McDonalds. The products that are being sold by IFAs are infinitely more complex and long lasting in their effects than a Big Mac.”

Hoban added: “Investment advice will be seen as a professional activity, financial advisers will have a new status and I believe fresh talent will be attracted to the industry.”

He said: “The FSA report that rather than being put off by study many financial advisers are going on to obtain more advanced qualifications than those required by the RDR.”

He acknowledged that people have concerns about meeting the new minimum standards but, he said, with two years to go until RDR comes in half of advisers already meet them.

He said: “Many financial advisers feel that should be grandfathered so that those advisers with experience are exempt, the question is how do we know how good those advisers actually are?”.

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Comments

There are 41 comments at the moment, we would love to hear your opinion too.

  1. “Big Mac” Hoban didn’t allow any questions or debate from the floor – I wonder why?

  2. Outrageous comment from Mark Hoban. Who is paying this guy?

  3. …And there’s the rub – the current level of qualification required to advise on complex financial matters is no higher in status than that required to manage a shift at MacDonalds.

    The way forward is clear. We have to somehow raise the bar for entry into the industry if we want to have a profession worthy of the name profession.

    The 2012 deadline to achieve the already watered down Diploma is not unrealistic, especially as this deadline has been pretty well fixed for at least 2 years.

    Asking someone to sit a handful of what are relatively straightforward exams in 4 years is not unreasonable. If those advisers have not yet begun to get to grips with this then who’s fault is that? In fact it is not unreasonable in my view to pass these exams in 2 years, especially if those people have, as seems to be the regular claim, years of experience – they (should) already know most of the syllabus!

  4. Hoban proves his ignorance by the stupidity of his ridiculous statement. Obviously he has no knowledge of financial services at the sharp end.

  5. Whilst the original intentions of the RDR were probably laudible it has become horrifically over-engineered by FSA and other interested parties.

    We have all lost sight of what the RDR set out to do and it has taken too long to implement are we surprised that the intended thoroughbred horse has become an overweight camel.

  6. If Mr Hoban is unsure of how good an adviser is I would direct him to the FSA.
    If he thinks having a certain qualification is a guarantee of competence I’m afraid he is in cuckoo land

  7. Hoban said: “The current minimum financial adviser qualification is at the same level as a diploma in shift management offered by McDonalds.”

    He added: “The products that are being sold by IFAs are infinitely more complex and long lasting in their effects than a Big Mac.”

    THE ONLY CLOWN HERE IS NOT RONALD it is quite clearly MARK HOBAN!!!

    First of all its the BANKS that need regulating hard and fast!!!

  8. The fact Mr Hoban did not reportedly allow any questions or debate pretty much says it all.

    RDR is a done deal whether you like it or not and no debate on the matter is to be allowed.

    That is democracy Hoban style.

    We keep hearing about fairness, responsibility and justice are the key objectives of this new Government, but I don’t see any of that here.

    Maybe McDonalds is where Mr Hoban gets his advice from!!

  9. I think what I am looking for now are two things:
    1. An end to this ridiculous Gapfill idea which flies completely against the previous ‘no regrets’ policy.
    2. That the FSA guarantee to us that after RDR they will leave the rules alone for a minimum period of 10 years in order that we can actually see if they work. None of the other initiatives over the past 20 years have been given more than a couple of years before they’ve been changed. I need to know whether I should invest in my business or whether it will be subject to sustained regulatory attack.

  10. Michael Wainwright 20th October 2010 at 12:46 pm

    I am not an IFA, I am an investor.

    Today Hoban said said that members should support the objectives set out by the RDR. I do not think that there are many people who do not support the objectives. They have little to do with what the FSA has actually produced.

    He said: “The current minimum financial adviser qualification is at the same level as a diploma in shift management offered by McDonalds.” What a silly remark. Just because they may have a similar number does not mean they are comparable. My own adviser has the the highest qualifications that have been available over the last few years and will still not satisfy the requirements of the FSA/CII.

    The matter of commission v fees does not seem to concern him. It does me. My adviser will charge me a fee next time I ask for advice. This fee may attract VAT. As someone about to start drawing my pension, I will not want to pay a fee. It is absolutely clear, and has been for very many years, what commission will be payable as it is shown on the illustration. What is wrong with having a choice?

  11. I think he does staff at McDonalds a dis-service. How does he know how complicated a Diploma in shift patterns is?

  12. Mark McHoban Initially distanced the Treasury from the FSA saying that they could not tell the FSA what to do.

    Later he said “We are not doing ….” clearly showing that he and the FSA are joined at the hip.

    Guess who he will work for when his time in government are over ?

  13. The surly smirk on this guy’s face says it all to me. Are we to get 5 stars like they have in McDonalds so that we can say, “Oh! look at me, I’m Chartered”. I think this guy is grooming himself for a period of ineptitude as Head of the FSA. Hopefully that will be the Food Standards Agency not the Financial Services Agency

  14. George Williamson 20th October 2010 at 1:06 pm

    Mark Hoban,

    You said:-

    “The current minimum financial adviser qualification is at the same level as a diploma in shift management offered by McDonalds. The products that are being sold by IFAs are infinitely more complex and long lasting in their effects than a Big Mac.”

    So please provide details of the minimum qualification required to be an MP – I think the answer is none, yet you can cause far more damage to society than any IFA. Applying your own logic, you should please now resign.

    Please also could you chase up my request for the job of Chief Executive (Designate) of the Consumer Protection & Markets Authority (CPMA) that was adveritised in the Sunday Times (17/10/2010), as the Recruitment Consultants are still waiting on the Treasury (your Department) providing them with details before they can issue application Forms.

    Many thanks,

  15. Check the member’s register of interests.

    Perhaps explains his comments:

    http://www.theyworkforyou.com/regmem/?p=10964

  16. “Many financial advisers feel that [they] should be grandfathered so that those advisers with experience are exempt, the question is how do we know how good those advisers actually are?”.

    Such a statement reflects either breathtaking ignorance or a wilful denial of all the facts.

    Look at the complaints data, look at the basis on which most IFA’s have built and sustained their businesses over many years, look at what most consumers say about most IFA’s, look at the regulatory playing field which is massively tilted in favour of the banks, compare the post-sale product justification letters commonly produced by banks with the pre-sale advice letters produced by most IFA’s.

    The evidence is there, Mr Hoban ~ you just don’t want to acknowledge it.

  17. michael ashcroft 20th October 2010 at 1:54 pm

    I really thought that I would be unsurprised at the level of banal lunacy that comes out of the House of Commons. Todays abject drivel from Mark Hoban displays the total lack of awareness of the real world outside their protected environment.
    To describe IFAs as equivalent in qualifications to a shift supervisor in MacDonalds is, frankly pitiful.
    Who do these people think is a servant to whom ?
    On an inflated salary, and a plum pension, that I would love to offer my clients, and to have this appalling lack of knowledge about the subject that they are, supposedly, expert on, is unforgivable.
    What value does HE give for the inflated cost of allowing his Ego to spout at our expense ?
    I, and most other IFAs, work hard and diligently for our clients, solving problems that Mr Hoban would not even understand, let alone have the skills and knowledge to offer to advise them correctly.
    I am a sole trader, with over 30 years experience in my field.
    I have never had a complaint against me, and have many satisfied clients who are happy to recommend me to others.
    Yet, there is not one iota of allowance for all this.
    Yet the Banks can get away with almost whatever they wish.
    Let’s have a truly level playing field for once.
    Treating Customers Fairly ?
    I think not.

  18. @ Michael Wainwright

    Nothing in the RDR requires your adviser to charge you a fee next time you ask him for advice. Adviser charging means you and he agree a price and that can be taken from any product that he recommends to you. If that has been your relationship to date it may continue to be on that basis. Do not make the same mistake that Harriet Baldwin made of suggesting that “fees” carry VAT and that commission does not. Ask your IFA to read the ABI HMRC notes on this subject

    @ Michael Fallas

    The debate had a 30 minute duration. Harriet Baldwin MP took 23 of those allocated minutes and allowed on my count 9 interventions from MPs who all pretty much fed her the lines she had in her speech. Mark Holban was therefore only allowed 7 minutes to make his point.

    Harriet Baldwin made a very “ageist” remark implying that older IFAs can’t hack it with exams- how very rude

  19. Mark Hoban your comparison is disgraceful and you should be ashamed that a person in your position should demonstrate selective hearing to the extent that you have by the understanding you clearly have not got!

  20. On national TV, Hector Sants told Stephen Sackur that the FSA is “completely independent of government”. I watched the programme.

    So what’s Mark Hoban doing sticking his nose into FSA affairs then?

    I think you should write a letter of protest, Hector. It simply isn’t on for government to be trampling on your turf, is it now?

    BTW, if the FSA isn’t answerable to government, then just who is it answerable to?

  21. Maybe we should get an IFA and a McDonalds shift manager to swap jobs for a month and see who fares better, then Hoban could see how equivalent they are.

  22. Experience doesn’t count.

    We’re going to end up with ‘pimply faced’ young graduates who are supposedly qualified to give advice, supported by sub-ordinate senior ’50 plus generic ex IFAs’ with 20/30 years experience who can only provide guidance and fill in paperwork- ie reduced to the level of a junior clerk. What a silly occupation and far removed from being a ‘real’ Profession. I’m out of this game but am still a CHARTERED ENGINEER.

  23. Goodness me – Mr Hoban certainly seems to have touched a nerve.

    Maybe his comments are bit too close to the truth for comfort?

  24. I listened to Mark Hobins speech via the parliament website, yes it is easy to joke, yet in many cases the but of that joke takes matters personally rather than focuses on the much more serious nature of the debate as a whole, clearly undesirable, but let move on.

    I am an IFA and of the two issues in the RDR that concern me the most (commission and exams) I am prepared to accept commission has had its day and educate my clients accordingly, with in some cases a degree of business common sense in relationship to fees and how they are charged.

    The issue that does concern me though is exams. As we all know the final rule set of RDR is yet to be clarified. I do feel that the issue of time is important, and am of the opinion 2 years is not sufficient to obtain suitable qualifications given that the FSA is seeking to have us all at a level equal to broadly chartered status. Extending the time period out to around 4 to 5 years from RDR finalisation would be much fairer – after all that is about the average time it takes to obtain a degree. Such a time period would also enable IFA’s who do not wish to study and take the exam time to succession plan

  25. Neil F Liversidge 20th October 2010 at 3:17 pm

    As John Blackmore points out, Mark McHoban distanced the Treasury from the FSA saying that they could not tell the FSA what to do. In effect then there is no democratic control of the FSA and it is accountable to nobody. Surely then that makes it a …. QUANGO! And as such, surely, having blown £1.8bn of our money on the RDR, it must be abolished?

  26. Matthew Timmins, SimplyBiz 20th October 2010 at 3:20 pm

    Mr. Hoban’s comments, in addition to his reported refusal to take any debate or questions from the floor, reveal not only a presumed lack of interaction with his constituents, but also a lack of knowledge about financial services. Had he consulted his constituents on this matter, I suspect he would have received the same feedback as Ms. Baldwin, Mr. Garnier and the 13 other MPs who raised concerns during the debate experienced.

    His inflammatory comparison of IFAs to MacDonalds workers is offensive to the thousands of advisers who work tirelessly to provide clients with an important and professional service, and only negates his more rational points about the perception of advisers and the importance of attracting new blood into the industry. How can we improve the perception of advisers amongst the public when senior politicians are making this type of absurd comment?

    If Mr. Hoban had been aware of the facts – that independent financial advisers were accountable for only 2% of complaints received by the Financial Ombudsman Service in 2009/10, in sharp contrast to the 61% which were received against banks – he may have delivered his comments in a more respectful tone.

  27. Alec G Moonshiner 20th October 2010 at 3:30 pm

    Paper qualifications and good advice do not necessarily go hand in hand. In my 38 years in this industry, the biggest crook I ever met was also the highest qualified practitioner.

  28. It is good to see a ‘client’ by way of Michael Wainright making the effort to put a point over. A point that is mirrored by our own client base.

    I just DO NOT UNDERSTAND how the very wealthy investors who are used to paying fees are dictating the remuneration method for which many will not be willing or able to pay. This will inevitably mean less advice, less IFA’s and more direct selling from the banks.

    Its just not right. Someone has got to be pulling someones strings here.

  29. Gary kershaw Group Compliance Director SimplyBiz 20th October 2010 at 3:37 pm

    Mr.Hoban’s comments, in addition to his refusal to take any debate or questions from the floor, reveal not only a presumed lack of interaction with his constituents, but also a lack of knowledge about financial services which is suprising bearing in mind his background.

    Had he bothered to consult his constituents on this matter, I suspect he would have received the same feedback as the other MP’s involved.

    His disgraceful comparison of IFAs to MacDonalds workers is at best unprofessional and at worst downright offensive to the thousands of advisers who work tirelessly to provide clients with an important and professional service.

    I wonder how the the people of his native North East will feel when RDR makes their ability to receive sound independent financial advice too expensive for their modest means or is he intent on turning his back on his roots.

    Its a pity flogging is now illegal in this country as I can think of 20000+ individuals who would like to see Mr Hoban head in the stocks.

    His resignation will surely be forthcoming allowing in following one of his key passions Cooking (Burgers I hope) oh the irony that would produce

    Anyone for a petition.

  30. Well lads … looks like we’ve been dumped-on from a great height!

    Sod the lot of them – I’ll be gone out of this Industry within 2 years!

  31. Anyone else watch the recent programme on CH4 “Undercover Boss USA” – featuring the CEO of the 7/11 empire going undercover in the 7/11 outlets as a novice employee?

    One store he visited sold more coffee than any other 7/11 store and he wanted to discover why – he didn’t think it was the coffee, because it had the same coffee as every other store.

    What he found was a manageress at that store who knew every customer, knew them by their first names, knew about their families, their ups and downs in life, their background and their future plans – it was that unique person and the relationships she had built with the customers that sustained that business.

    Maybe, one day Mr Hoban might just spend time undercover with the IFAs who have established just those types of relationships with their clients. Yes, some will have passed exams, and some will not, but it is the relationships and the trust involved that provides the value to the IFA and the clients.

    You never know, one day Mr Hoban will indeed wake up and smell the coffee – and ask himself, just as the CEO of 7/11 did

    – why IFAs (exam passed or not) have the share of the markets that they do have, and others don’t.

    – and the high level of complaints that they don’t have, and others do.

  32. I don’t generally go for ad hominem attacks, but ever there were a man who was in need of the snip at puberty, it would be Mark Hoban MP.

    This man makes Gordon Brown look like Warren Buffet.

  33. I’m struggling to understand why you’re all getting so upset – Mr Hoban’s comments are absolutely spot on!

    As for Julian Stevens’ assertion that politicians (Mark Hoban in this instance) shouldn’t be sticking their noses into FSA business……..surely those rules must also apply to Harriet Baldwin and Mark Garnier?!

  34. To Mr Anonymous 5.00 p.m. You are clearly out of sync with the feelings of the overwhelming majority of advisers who are sick to the teeth of interfering busybodies whose main aim is to climb higher up the pole.

    Mark Hoban clearly has only the scantest clue as to his brief and we can look forward to a re-shuffle moving him to a more appropriate office such as Minister for Septic Tanks or, more appropriately, Minister without portfolio.

    There are way too many individuals in positions of influence who have mastered the theory but cannot do the job.

    Invariably it is the politicians and regulators who fit this particular description and advisers who have to dig themselves out of the guano.

  35. Mark Hoban has made a classic mistake (or was it what he intended) of implying we did not agree with the aims of the RDR, by us publicly disagreeing with the implentation.
    It reminds me of the Army system for giving orders. You have a mission statement which si repeated twice. The mission is not questioned as that is passe down from on high. Few IFAs disagree with the RDRs mission statement. What they do disagree with is the plan for the execution of that mission and it is incumbent on all from the bottom to the top to ask questions at the end of the orders group to identify why the exeution might not achieve the missions aims. Often the person giving the orders is more qualified, but less experienced than the experienced rankers and it is essential that the senior non-commissioedn officers point out (not usually publicly) the execution pahse problems to the officer and whilst it is still his/her decision which may cost lives, his life is also on the line.
    In this case, the senior NCOs have had to go public and yet are still ignored by the decision maker who believes the execution plan will achieve the mission, contrary to all the evidence. He wishes to plow ahead, but is taking no personal risk in doing so. In fact, judging by the members interests, he may benefit as the FSA funds PWC, who appear to fund Mark Hoban…… so if he doesn’t get a big job at the FSA, he’ll probably get one at PWC if he ends up out of Government.

  36. When do the MP’s start their exams? What qualifications are needed to claim outrageous expenses, (in some cases more for a month as MP than some of their constituents earn in a year!).
    Yes, it’s been said so many times but when are the banks going to be treated the same as IFA’s when giving advice? I know of several instances where bank staff gave out totally wrong information to people (and even talked about products for which they were not regulated) and yet complaints fell on deaf ears.As per a previous comment; why not leave the choice to the consumer? If an IFA is so bad at their job, would they still have clients coming back again and again for advice?

  37. Actually management staff at Mcdonalds are very very intelligent, it is not an easy job at all, they manage up to 60 staff per site, the managers are in charge of stockcontrol, food hygene and health and safety of the workers and consumers plus much more.

    If the min standard for an industry matches such a busy and complex business manager within fast food that is a good standard for an entry level member of staff.

    Training starts once they enter the industry.

    What is worrying is that a treasury minister should have such a low opinion of such a large and successful organisation’s managers.

    In the food industry a meal can have a much longer lasting effect I can assure you, especially if the management are not bang up to date with their knowledge of food standards and managing their food preparation shift workers.

    You Big Mac could be your last if they were not skilled at their work.

    The misconception which has never been looked at properly is that the past advanced exam’s purpose was to deliver financial advice to the consumer, most were not designed for this purpose.

    If they were not designed for this purpose which fool thought that the end result would be a higher standard of advice to the consumer?

    Quality and tested CPD is the way forward, there is an issue with structured products then they are next on the agenda for CPD, state benefits alter next for CPD, there is an issue with risk profiling from the FSA cover it in CPD.

    Medical staff use CPD as their industry never stands still, I am sure they looked at qualifications and dropped them for good reason, good reasons the FSA could not see.

  38. Alan Lakey | 20 Oct 2010 6:23 pm

    To Mr Anonymous 5.00 p.m. You are clearly out of sync with the feelings of the overwhelming majority of advisers who are sick to the teeth of interfering busybodies whose main aim is to climb higher up the pole.

    ——————————————————————–

    Perhaps I am out of sync with the adviser community, Alan (incidentally, I don’t view this as a negative), but you haven’t addressed the points I raised.

    The current benchmark qualification required to give financial advice (FPC) has been categorised as QCF Level 3, and so has McDonalds’ Diploma in Shift Management. Mark Hoban’s comments are therefore 100% spot on.

    Also, if people object to Mark Hoban commenting on matters relating to the RDR, logic dictates that they must also object to the comments made by Mark Garnier and Harriet Baldwin. Or do you only object to comments that don’t suit your agenda?

  39. RE; Anonymous | 21 Oct 2010 1:36 pm

    One can agree with the content of what Mr Hoban said.

    Let us be honest here, he looked as if he turned up and tried to ‘wing it’ with some statements that looked as if someone else jotted down.

    He even failed to repeat Harriett Baldwin’s correctly ‘a sledgehammer used to miss a nut’ which he repeated as ‘a sledgehammer used to crack a nut’

    The financial services course takes around 280 hours plus exams to complete, the shift manager course around 85 hours, there must be a content difference.

    The misconception which makes this idea fail from the off is the basic assumption that the advanced qualifications above certificate are designed for delivery of advice to the consumer.

    Most are not designed for this purpose and are wider industry qualifications.

    Lately (August 2010 onwards) there has been a slight leaning more toward delivering advice due to new competition in delivering qualifications.

    However upgraded CPD with testing is the answer not qualifications.

  40. In response to Anonymous at 3.21: The exams are designed for advice purposes – particularly if you go past the diploma (which, in all honesty, tests technical know-how) and onto the advanced diploma.

    Speaking as someone who is already level 6 qualified, I can only offer an opinion from personal experience – that being that exam studies over the past 5 years or so have made me much, much better at my job.

    I keep hearing how experienced advisers shouldn’t be forced through these exams as they already have 20 / 30 years experience. Don’t you find that a tad arrogant? Are people seriously suggesting that these advisers already know it all? My experience of local IFAs suggests quite the opposite.

  41. “If he thinks having a certain qualification is a guarantee of competence I’m afraid he is in cuckoo land.”

    True, qualifications are no guarantee of competence.

    On the other hand, for someone to have done the job for years and still be incapable of passing what remains a fairly basic exam is fairly strong evidence of incompetence. Retraining to flip hamburgers would be their best course.

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