The Parliamentary debate on the RDR has not come too late to change the outcome of the review, according to British Bankers’ Association chief executive Angela Knight.
Conservative MPs Harriett Baldwin and Mark Garnier secured a House of Commons debate about the impact of the RDR on financial advisers, which was held this week.
Last week, Association of British Insurers acting director of life and savings Helen White said the debate was a “desperate last attempt” by IFAs to fight the reforms, which had “no chance” of succeeding.
In an interview with Money Marketing, Knight says the RDR has not yet been made law and some issues still need to be discussed. She says she has concerns that the advice gap will widen.
She says: “I do not see why the Parliamentary debate is too late, I think sometimes these things need to be properly ventilated. The RDR is not law. We are worried that the RDR will cause the market to shift and the choice will be between taking expensive advice or not taking advice at all.”
Knight sees simplified advice as key to servicing the mass market.
She says: “The issue which needs further discussion is how one develops simplified advice. It seems to have got itself marginalised in regulatory thinking and that needs to come back to the fore.”
The FSA’s RDR rules say the regulator will not look to create a new regulatory regime for simplified advice because of a lack of consensus in the industry about how it would operate.
It is asking firms to come forward with proposals and the BBA’s submission suggests it should be process-led.
It says: “The service would be predicated on models which generate personal recommendations based on a limited assessment of a customer’s financial circumstances.”
Knight says: “It needs to be absolutely clear that simplified advice is limited to a certain type of product or product suite. It has to follow a proper process, people have got to be trained, but not to level four necessarily, and the process has to be agreed with not just the Financial Ombudsman Service but also the regulator.”
Knight says the moving regulatory jigsaw is one of the biggest problems facing banks, along with rebuilding trust in the sector and playing a part in the recovery by supporting businesses and lending responsibly. She says: “The UK is altering its regulatory environment, the EU is altering its regulatory environment, Basel’s got a view on specific issues and the G20 is looking for international standard setters. This is a very mobile and moveable feast.”
She believes the G20 is the right vehicle for agreeing international regulation but the UK would be “foolish” to think that all the issues discussed are of equal importance to all countries.
She says: “International stability is of vital importance to all countries. A completely level playing field in terms of regulation is probably an impossibility but can we get a more level playing field? Yes.”
Knight says even with a more level playing field, there will still be a gravitation of business to the high-growth East but she stresses the importance of maintaining the UK’s appeal as a financial centre.
She says: “This means good and fair regulation, fair taxation and fairer employment policies but the UK does see things in a tougher light to a number of other countries so we will just have to wait and see what happens.”