The British Bankers’ Association has hit out at the impact the RDR is having on consumers just over two months after the new rules came into force on 1 January.
Speaking at a Westminster Business Forum event on retail banking today, BBA executive head of retail Eric Leenders said customers are being left under-served.
He said: “There has been market exit because of the RDR. It has left the mass retail market under-served in terms of face-to-face, long-term savings and investment advice.
“Simply, firms have moved out of the market. It is a very good example for access to markets to be considered through statutory objectives at the regulator.
“We did a lot of work trying to find some compromise or alternative solution such as advice light, directional, information at the time of the RDR but ultimately it did not prevail. We would argue that we want to be providing advice across our customer base.”
Barclays and Lloyds Banking Group have left mass market advice, the Royal Bank of Scotland has significantly scaled back its offering, while Santander’s advisers are currently suspended as it considers whether to scrap investment advice. Nationwide still offers a single-tied advice service through Legal & General and HSBC is offering a restricted advice service.
HSBC head of UK bank and deputy chief executive officer Antonio Simoes said: “One thing I worry about is the number of products no longer offered to the mass market. In the run up to the RDR, the number of UK investment advisers dropped by 12 per cent. The vast majority of the UK market does not have access to investment advice so there is an impact.”
Simoes also warned the cumulative effect of regulation will force UK banks into financial exclusion and push up the cost of services.
He said: “If you think of the RDR, mortgage market review and other new conduct rules, many of these proposals have merits in their own right.
“My concern is that if you add them all together we have a cumulative impact that is too high. It could be bad for competition because if the profitability of the sector is not there then no one will want to invest.”