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Bailey: No conviction that FAMR will work

Andrew Bailey BBA Conference 2012 480

FCA chief executive Andrew Bailey has told MPs he does not know if the Financial Advice Market Review proposals will close the advice gap – one of the key objectives of the report.

Appearing in front of the Treasury Select Committee committee today, Bailey was asked by Labour MP John Mann if consumers can expect to see firms “hung out to dry” by the FCA, citing the Retail Distribution Review and RBS’s treatment of some customers.

Bailey said: “The issue with the RDR was that it tackled two things. It tackled opaque commission and it tackled the general question of qualifications and training for the adviser population.”

He added: “But it contributed – it wasn’t the only thing that contributed – to the advice gap so that if you are a less well-off member of the public or you don’t want lifetime advice it has left a gap.

“The so-called FAMR proposals have got to fill that gap. We have got to be very clear in implementing them, keep asking ourselves the question will they do it or not.”

The final report as part of the FAMR, published in March, set out 28 policy recommendations to boost access and affordability to advice, as well as addressing issues related to the liability of giving advice.

Bailey was pressed by the committee about whether the FAMR proposals would fill the advice gap.

He says: “They have the potential to do it but I don’t think we can sign that one off with conviction.”

Bailey explains the success of FAMR depends on whether useful technology emerges in the market but that the “jury is out”.

He adds: “Not because fintech is bad but can it do the iterative advice process you need in that world.”

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. The RDR had three objectives not two. He overlooked the matter of independence which is so confused now as to be meaningless.

  2. I guess at least Mr Bailey has not said yes the FAMR will fully or partially address the advice gap. I still despair at the lack of realism shown by regulators when developing policy. And the lack of understanding of politicians when asking such fatuous questions.

  3. I would like to second Mr Bailey’s suggestion in that I too have no confidence that the FAMR will work.

    Right now that that is sorted out I think I should turn my attention to the Turkey crisis. This is all a lot easier than I thought it would be.

  4. Two interesting phrases

    1 – you don’t want lifetime advice it has left a gap. – Many ‘middle Britain’ clients only want advice and solutions for the here and now e.g. pension options – they don’t necessarily want holistic financial planning – I agree that holistic planning is important but many clients want advice in bite sized chunks

    2 Not because fintech is bad but can it do the iterative advice process you need in that world – Has the penny dropped? robo advice cannot do the iterative bit

    Maybe this is progress

  5. Good, I think m
    Mr Bailey is saying that FAMR is not comprehensive enough and so hopefully now it will be revisited with a different committee, or at the very least, some new members! Everyone talks about the advice role in filling this gap and yet providers do not have the numbers of suitably qualified staff, but they are the sector who have the most representation on this panel. Ask the organ grinders!!

  6. Trevor Harrington 20th July 2016 at 4:55 pm

    If Mr Bailey and the Government seriously do want to close the advice gap, then it is really very simple indeed.

    First – they need to acknowledge that which created the problem in the first place – quite obviously the RDR.

    Second – they need to ask those who will have the right answer to the problem – quite obviously the smaller IFA practices.

    Unfortunately, most men in business life have absolutely no concept in their minds whatsoever of how to admit responsibility for something, and then say sorry. Also, our regulator, has spent 28 years steadfastly refusing to listen to the smaller IFA practitioner, a sad and utterly stupid state of affairs, which unfortunately persists to this very day.

    Come on Theresa, when you have five minutes, would you mind sorting these idiots out please.

  7. Julian Stevens 20th July 2016 at 8:33 pm

    It might help if the majority of members on the FAMR panel were advisers as opposed to people with no experience whatsoever of what providing advice actually entails.

  8. Not this old saw again.
    Overall there is no gap Those who are perceived to be in it have no money to partake and no real interest either.
    For those looking for one off advice, they are just not a business proposition. Regulation ( which will not reduce as it is there in the main to protect idiots) has made them too risky and unprofitable.
    So please can we move on.

  9. Well just more of the same, he needs to ask the people who have the answers. They can’t be found in Banks or in the civil service, or anyone at the FCA. Come and talk to some IFAs, on the other hand I will come and talk to you, we should get this done. Who wants to join me?

    • We arranged a number of visits to the FCA on a ‘Mission’ to try and create a meaningful dialogue on how experienced IFAs could help – particularly in complex matters such as pension consilidation and ‘at-retirement’.
      Unfortunately, on all 3 visits, none of the FCA staff we met understood anything about what we were saying to them, and they were simply not interested.
      A total and utter waste of time.

  10. So in short RDR was a monumental and very expensive XXXX up !

    Did it cut out commission ?

    And yes it found that advisers “can” pass exams !!

    Its not bloody hard if your livelihood depends on it !

    The million dollar question is did it make me a better adviser ? a poorer one yes, but better or more professional ? not really

    But the real question is……… did it or has it or will it, benefit any clients past, present or future………. NO !

    The sole purpose of the RDR was an Adviser cull, a pig with lipstick (if you will) and it back fired

    I tell you what, we are now paying levies on the 5/4 year 2008-2013 pre RDR window of “opportunity” for people (so called advisers) to sell as much crap as possible and bail out come 01/01/2013……..

    RDR is going to cost us (well are clients) dear for the next 5 years or so

  11. DRGB ~ A pretty clear elucidation of the FCA’s general attitude towards us. The Great Unwashed. You’ve tried to engage positively with these arrogant bastards and basically just been given the brush off. I expect the people they sent to met you were a filing clerk, a janitor and someone from the typing pool.

    Still, what with Andrew Bailey having declared that his agenda will be no different from that of his predecessor, what prospects are there for change?

  12. Harry Katz ~ Reluctantly, I have to admit you’re probably right.

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