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Barclays calls for HNW advice to be exempt from RDR

Barclays is calling on the FSA to exempt the high-net-worth advice market from the full RDR requirements, claiming these clients are more “financially sophisticated” than other retail consumers.

In its response to the Treasury select committee’s RDR consultation, Barclays says the RDR does not take adequate account of the “unique needs” of high-net-worth individuals.

The bank says it is not convinced that the FSA’s claim that the model for investment advice is broken applies for HNW individuals.

It says: “We have not seen convincing evidence of the FSA’s claim despite extending these rules to cover private wealth management. The high-net-worth market is highly competitive and involves internationally mobile clients who are often more financially sophisticated than retail clients.”

In January, the FSA fined Barclays £7.7m for failures relating to the sale of Aviva funds, which were first revealed by Money Marketing in April 2009.

Last month, Money Marketing revealed Barclays is closing its retail advice arm, Barclays Financial Planning, but will continue serving HNW clients through Barclays Wealth.

GAEIA Partnership director Helen Tandy says: “It is ludicrous for a company which has been fined so much to think it does not need to go down the RDR route. Better qualifications and clearer pay structures are equally applicable to HNW clients, they are not all financial whizzes.”

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Comments

There are 50 comments at the moment, we would love to hear your opinion too.

  1. This is quite funny. So the type of people who will actually benefit from RDR shouldn’t receive RDR type advice.

    Is this because Barclays Wealth clients have been paying high commissions that they will find hard to justify if they try to charge an explicit fee?

  2. I am sure Sir Keith Mills thinks he is sophisticated, but Coutts still managed to advise him to take out AIG’s investments, which resulted in a massive loss, but I suppose Barclays can not say “unsophisticated investors don’t need RDR, with Barclays recent fines for incorrect advice!

  3. Surely the more sophisticated the client, the more qualifications the adviser needs to be able to advise them?

  4. perhaps they could make people from Norfolk exempt too – it would save me a lot of buggering about and I’m sure I could make a convincing case for it. Well, as convincing as Barclays.

    Be honest now – do you chaps make these stories up for Friday afternoons?

  5. This is really funny! What a great end to the week. Thank you Barclays for your comedy repartee.

  6. Be honest, this did make you laugh?

  7. Wow Barclays are full of surprises.

    Just shows how popular RDR really is and now even the big players are waking up and realizing the consequences and cost.

    Will be interesting to see if big money talks and if the FSA, FCA, or whatever it is that is our regulator does !!

    Maybe they will move outside the UK and “passport in” for their high net worth clients, wouldn’t surprise me, they have the money and clout to do it too.

    This strikes me as not an issue about “advice” but one of “regulation”.

  8. Barclays should be exempt from HNW clients.

  9. Fee charging IFA - Finchley N3 18th February 2011 at 1:15 pm

    ..theres a surprise! – why? because the commissions they bag from badly advising their ill informed clients who have more money than sense goes into tens of thousands – thats why.

    The products that they offer to ‘HNW’ clients pay huge commissions and misleading.

    The FSA need to come down on Barclays hard.

  10. Is it april 1st?

  11. So does just having a lot of money mean you are financially sophisticated? You might be and again you might not.
    Just won the Lottery? Just inherited a large estate?

  12. Just because people are deemed to be High Net Worth (whatever that means) does not by definition make them any more financially savvy than anyone else in my experience In fact the very opposite can sometimes be the case.

    Such a ridiculous assertion merely typifies the blatant arrogance with which so called “wealth managers” (que?) continue to purport and hide behind as if they have some divine right to exist and operate differently to the rest of us – they do not.

    That said, I dare say that their vast lobbying machine has already sprung into action and that it is not inconceivable that they may yet come away with a concession after all.

    If so it will be nothing short of a travesty!

  13. I wonder if this has anything to do with Barclays closing down the bit of the business that was for the ‘ordinary’ man in the street?

    Or is this me just being extremely cynical?

  14. Jennifer Nicholls 18th February 2011 at 1:21 pm

    I have never heard so much rubbish in all my life. They are showing themselves up as fools. But hey I bet Hector will agree because that’s the level he is at.

  15. This Bank has decided that it cannot make a profit from run of the mill clients post RDR. It obviously thinks the same about HNW’s too. So, instead of cutting them loose in the same way in order that the IFA fraternity can do a proper job for them; it wants to be exempt from regulation. This from a Bank who were fined in excess of £7m for failing to adequately control their salesforce’s excesses. Barclays…..”you’re having a laugh!”

  16. I would have thought finacially sophisticated investors would have baulked at the high commissions Barclays feel are necessary. Just saying!

    Anyone got any idea how much renewal commission Barclays is recieving to be able to service all these HNW investors?

  17. So a wealthy scrap dealer putting millions with Barclays WM is a financially astute investor…? Daft. More worrying is the suspicion that Barclays et al have a lot more sway with the FSA than small independent IFA businesses, most of which do actually put the needs of clients before the corporate target.

  18. Now even the banks are turning on RDR. They are saying RDR will not even benefit those who is is deamed to benefit lol.

    It falling apart even before its been put together – what a pathetic waste of time and money!

  19. RDR =
    Really
    Detrimental
    Rules

    BARCLAYS =
    Bl**dy
    Awful
    Rules,
    Can’t
    Let
    Anyold
    Yobbo
    Sell

  20. Given the investment expertise of banks – vis investing in all these securitised US mortgages and messing everything up for all of us should they be permitted to give advice at all?

  21. Surely LNW (Low Net Worth) clients should be made exempt from fees, as per RDR, as they cannot, or will not, pay them.

  22. What a DIAMOND of an article – 🙁

    They are a Bank – integrity and honesty are always absent – end of.

  23. I’ve just passed the CISI wealth management Masters (yay!). It took me 9 months start to finish and I can now be a chartered member of CISI. Pretty much all the others who took it with me are wealth managers in the Private Banking arms of the likes of Barclays. Around half failed each exam I took, which makes RDR a tad inconvenient for the Henrys who can’t pass exams.

    Its taken me years and much more work to get to the same level under the CII exams….just making the point that maybe these ‘wealth managers’ aren’t as great as they think they are – I have no doubt the public, even the rich public, needs protecting from these self-regarding amateurs

  24. Is it April 1st? Is my calendar wrong?

  25. So the FSA want a system that is unaffordable to 99% of the population and provides perfect advice to the remaining 1% – and Barclays want to exempt the 1%. So that will make RDR 100% successful (as no one covered by RDR regulations will receive unsuitable advice!). Well done FSA – bonuses all round I think!

  26. Bit early for April Fools jokes, isn’t it?

    Of course that’s what they want – it’s the only area of the market they are prepared to plunder, now they have withdrawn from every other aspect of advice.

    All animals are equal – but some are more equal than others!

  27. Iisit April 1st???
    Did they really say that?

  28. They can’t now afford to service (unprofitable) non HNW clients and now they say they can’t afford to service HNW’s. Just goes to show that it’s only a product-based commission sales culture that is profitable for them.

    Doing proper financial planning will just not generate enough income for them.

    What does that say for all of us!

  29. If your going to remove it for HNW clients you might as well remove it for the Not so HNW clients and then you might as well go the whole way and remove it for the VERY NOT SO HNW cleints as there are the ones who cannot afford to pay upfront.

  30. Unbelievable! How naeive are Barclays. Why on earth do they think anyone / the FSA especially after their recent fine will listen to their views or take them seriously. This really is beyond belief 😉

  31. Utter Poppy Cock. This sounds like a “pre concieved idea?” I know of Clients which Barclays would consider to be HNW but the client hasn’t a clue about investment! Most (And I’m not being sexist) are wealthy Widows who have inherited their money and basically left their husbands to arrange investments on their behalf.
    For Barclays to say HNW should be excluded from RDR is outrageous and shows just how out of touch they are.
    I would be very interested to know how many complaints have been made by HNW clients against the Banks who sell massive single investments which are not diverse or dont match risk profiles.

  32. Is this April the 1st ?…

  33. Barclays are having a giraffe, but they are a large bank and they do tend to get what they want.

    My money is on RDR for IFAs and no change for the banks.

  34. …i just can’t stop laughing, thank you, thank you Barclays…this is so funny…hang on a mo, my islington clients are quite a sophisticated lot….maybe they could be exempt too!!!!

  35. I wonder what role those criticising Barclays actually do….hmmmm. RDR has its challenges and for those amongst who are seemingly uninformed many large organisations are not only keeping HNW but defining propositions to ensure that the right service is available to all customers. So Mr Independent Advisor consider you own practices over the years and how this has contributed to the RDR outcomes

  36. Well, Well, Well. The company with large fines for misselling pulls out of the retail market to avoid further censure and moves into the HNW market to avoid further regulation.

    If anything HNW advisers need to be even more qualified because of the potentially more complcated products they advise on. The potentially ,liability for bad advice will be even larger. And don’t kid yourselves that having a lot of money makes a client more intelligent or sophisticated. Have you seen any of the so called ‘a listers’ recently ? Just because a person acn kick a ball doesn’t make then a financial expert or allow them to be offered a lower duty of care.

  37. ‘A fool and their money soon go seperate ways !’

  38. Remember Mikey Carroll – the “Lotto Lout”? – he was HNW, for a while at least.
    I bet Barclays would have loved to get their claws into him

  39. Mmmmmm Hmmm.. Apparently Imperial Tobacco are calling for cigarettes to be exempt from displaying Health Warnings as it might scare the kids who try to buy them.

  40. I have thoroughly enjoyed the comments and you have made my afternoon. Never have the words “You just could not make this up” seemed more appropriate. Mind you chaps, come on, lets give Barclays credit for having the bare faced cheek to make the suggestion in the first place!

  41. What a disasterous bit of PR.

  42. Sadly they are showing such a limited understanding of the practicalities not to mind inconsistencies.

    Just imagine a client whose funds reduce so they are no longer HNW or maybe are in drawdown and spending some money. How can they think this stuff can be managed. It would however give advisers a great incentive to make their clients a load of money so they can then be exempt from the RDR, so an adviser can take a Barclays style commission of 7% and then bring them back into the RDR catchment

  43. What a disaster RDR is turning out to be for the banks.talk about their intentions having the opposite effect.
    Hope the FSA are happy.no longer do people save or have a plan for retirement.on top of that every adviser is too scared or can’t afford to provide financial advice.
    Banks make a lot more money with people in debt than those with money so maybe that was always the overall intention.
    Well done the FSA for taking us from a nation of savers to a nation with absolutely nothing.
    Good work and I hope you are proud of yourselves!!

  44. Ah, what wonderful comments. My two favourites are the ‘can we exempt people in Norfolk’ (laugh out loud), and our very own anonymous banker on page 4, trying to suggest that those of us who are IFA are perhaps living in glass houses, and it is our actions which caused RDR.

    My understanding is that every piece of independent research has concluded that the bias and excess that RDR are to fix do not exist in the IFA market at statistically significant levels. We over in IFA land think the RDR is a bankers invention to try and kill the mass IFA market. The evidence largely supports that view. So now the biter bit?

    Mr Banker, maybe there is a little hubris here, but admission of responsibility for the RDR – no, that lies in your field I think.

  45. The Friday afternoon joke always makes oi larf.

    HNW clients… let’s see… Jeremy Clarkson, Frank Skinner… loads of celebrities with loadsamoney were shafted by their bank and lost the lot.

    Are these banking Muppets telling us their “clients” don’t need protecting?

    Watch this space, along comes a claims handler aimed squarely at the “HNW” brigade. If you find bad advice let me know.

  46. BW define HNW as clients with liquid assets of between £10m and £100m thereafter they are Ultra HNW. This means that the clients are not necessarily always in the “regulated” space anyway and the advice will be related to sophisticated tax planning including family limited partnerships et al. This is not about ‘bond churning” or structured products which is where the retail issues arose.

  47. Richard Ross – a complete prick

  48. I’ve been in this industry for more years than I care to remember, yet I still can’t link wealthy client’s to financial sophistication, infact in many cases quite the oposite occurs.

    Well done Barclays you’ve managed to get it wrong again!

  49. Barclays is looking to operate only in the HNW arena and wants it to be exempt from RDR.

    The regulator should simply remove the permissions from the banks to undertake any type of financial advice. That would be the most effective consumer protection that any regulator could provide.

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