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Cann tells FSA to make plans for RDR catastrophe

The Institute of Financial Planning has warned the FSA it must develop a “catastrophe strategy” in case it reaches June 2012 and half of advisers are not yet meeting the RDR requirements.

Speaking at the IFP conference last week at the Celtic Manor in Wales, chief executive Nick Cann said although he would urge the FSA to move ahead as fast as possible, it must have a risk mitigation strategy in place for such a scenario.

He says: “For the FSA, you have to ask, what is the catastrophe strategy? By June 2012, if 50 per cent have not got there, would there be a six-month delay? Or is it if 20 per cent have not got there? They will know where people are in terms of exams but they will not know exactly in terms of model.

“You have to worry about where the focus is for some medium and big IFAs and networks. Is their focus on the current needs of their business, regulatory reviews or even business survival or is it on meeting the needs of their advisers and supporting them on qualifications and the transition?”

Cann also warns against the assumption that the FSA “knows about everything” and says that, at times, regulation does not achieve the best outcome because some big firms and organisations are “par-ked” at the regulator.

He says: “The FSA is made up of good and hard working people whose job it is to make sense of what they hear from the people they consult with.

“But we get rubbish outcomes because the banks, the platforms, the CII have got people parked down there whose job it is to spend time lobbying, messaging and wearing people down so that the weight of the message does not come from the people who can influence the best outcome.”


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There are 18 comments at the moment, we would love to hear your opinion too.

  1. The FSA have already proved they could not give a monkeys about the actual result of RDR only that of their theoretcal results.

  2. Utter *rap comes in various forms;
    1. The FSA
    2. The RDR
    3. Sanctimonious muppetts employed within the IFP

  3. ………….”But we get rubbish outcomes because the banks, the platforms, the CII have got people parked down there whose job it is to spend time lobbying, messaging and wearing people down so that the weight of the message does not come from the people who can influence the best outcome.”

    In short vested interest.

    The FSA is like the NHS, no inherant culture for streamline efficiency, with job preservation and retention of ineptitude by promotion or sideways move before the interests of the consumer. At least the NHS is subject to political intervention.

    The RDR is on track for cataclysmic disaster.

  4. This is now especially worrying in view of Gapfill. I felt that I was ok as I am already level 4 qualified (DipPFS) but when I went to the CII website to check my gapfill, I only have 67 out of the 132 “required knowledge” areas completed! How many advisers need exams to reach Level 4 as well as gapfilling before 2012, and how many will get there in time? Very relevant comments Nick Cann

  5. More like Armageddon.

  6. Like Roger I thought I was OK but gapfill is ridiculous. How many lawyers would be allowed to practice if they had to make sure that their knowledge in EVERY area of the law including those in which they don’t practice is up to date. Few I would imagine.

    I suspect that this isn’t even legal – to change the goalposts and deprive people of their livelihoods. Where is Gareth Fatchett when you need him??

    It is the stupidity of ideas like gapfill that undermine the entire qualification system. As the owner of a relatively new IFA business I have taken the view that we will ignore the qualifications side of the RDR until some sense is instilled into it.

    We will concentrate on the business for the next twelve months and unless it is doing really well by Dec 2011 we will simply close and do something else.

    I’ve had enough and am now beginning to understand that unless regulation is sorted out in terms of constant meddling, FSA, RDR, exams etc this really isn’t a business with a future.

  7. There is an issue with ‘catastrophe planning’ in that it would act as a massive disincentive for people to update their qualifications.

    ie: It would essentially give the impression that upgrading qualifications is optional since there would be some sort of work around, or the cut-off date would keep slipping back.

  8. This is not new news! Predictions are telling us that 10,000 advisers will leave. I actually thought this was FSA policy afer all what esle could RDR be about?

    Otto Thoresen – CEO Aegon: “The RDR is only helping wealthy customers”

    AXA April 2009:”We will lobby the FSA to make sure the RDR does not mean less are able to access advice”

    David Cox – SuuqeaMarch 2009: “Two million clients could be left without an IFA after RDR – 40% could leave the industry”

    FSCC January 2009: “Financial advice will be less widely available post RDR”

    Institute of Financial Services: “RDR will impair financial advice before improving it”

    Alasdair Buchanan Scottish Life November 2009: “Sales advice is a real cop out and extremely confusing to investors”

    Stephen Gay – Aviva June 2009: “The regulator has failed to consider the danger of adviser charging limiting access to advice for those on lower incomes”

    Lord Lipsey: “Consumers in the middle (not high net worth or money guidance fodder) to be sold products by banks under the contradiction that is sales advice”

    Walter Merricks former Chief Ombudsman: “I think it would be unwise to count on the assumption that complaints from the retail investment world are suddenly going to go down as a result (of the RDR)”

    Deutsch Bank report August 2009: “There has been industry talk of 30% or even 50% if IFAs exiting the industry post 2012, which is not impossible”

    Paul Selly HBOS: “Bancassurers set to benefit”

    Richard Howells Director Zurich LifeJune 2009: “The big question mark is still around what benefit it will have for the ultimate consumer. I am still not convinced that all of these changes, when you sit down with a consumer and explain them, actually give rise to a consumer benefit that I can really hang my hat on.”

    Martin Lewis Money Saving Expert June 2009: “There’s a worrying possibility that the FSA is about to kill off independent financial advice in the UK for all but the wealthy. I do hope I’m wrong. I’m not convinced most people will want to pay for advice. The commission route has the advantage that you don’t pay a fee each and every time you want information; you can go without the worry of laying out cash. What I find most galling though is that bank-based advisers – those primarily responsible for PPI misselling, endowment mis-selling, investment mis-selling and generally poor advice all round are still to be allowed to be remunerated based on the number of sales.”

    Janet Walford OBE, Editor Money Management Sept 2009: “I am not paranoid enough to believe that the FSA has a hidden agenda to do away with small IFAs, but the law of unitended consequences may well mean that this will be the result. This is especially the case when set alongside the myriad of other proposals that are costing some £430 million to set up, with ongoing fees of £40 million pa thereafter, a mind boggling amount of cash.

    Peter Hamilton barrister, Source: Money Management Oct 2009, Scrapping the FSA by Marie Jennings MBE: “The Financial Services and Markets Act does not permit the FSA to cancel an authorisation simply because the FSA has changed its views on what the appropriate qualifications should be….It is one thing to impose new rules for new entrants to the IFA profession, it is quite another thing to disqualify someone who is already qualified.”

    David Hazelton of Tax Incentivised Savings Association(TISA) 30/10/09: The RDR could be detrimental to consumers both in terms of higher product charges and an increase in the cost of advice, warns the Tax Incentivised Savings Association(TISA). Implementation costs for the RDR are being “seriously underestimated” and product charges will consequently have to be raised.

    Bankhall managing director David Golder 03/11/09: “We say write to the regulator, write to your MP. Do not let the FSA get away with some of the things that will lead to the widespread decimation of our industry.”

    Robert Kerr, head of retail distribution development at Scottish Widows says: The RDR could have the unintended consequence of “disenfranchising” the majority of consumers from financial advice. “Our key concern is the RDR proposals will act to drive advice upmarket, with financial advice becoming the preserve of the wealthy leaving mass-market consumers un-served,”

    Nigel Waterson when Shadow pensions minister : “While no-one can object to raising the standards of training and competence, should an emphasis on exams take precedence over on-the-job training and experience? Is the 2012 implementation date practicable given the extra qualifications and changes in systems that will be required to be in place?
    Richard Hobbs Director Lansons Regulatory Consulting 16/07/10: “I have to say, it (RDR) only just survived an executive committee meeting in March 2010 at the FSA. The FSA are not particularly proud of the RDR but it is a question of losing face, so I think they will carry on.”


  9. I think Nick is missing the point. The FSA actually want to see a 50% minimum reduction in IFA numbers.

    The ideal would be 5% of current advisers qualified to level 6 minimum, charging high fees for complex advice with Banks and Networks controlling the mass market dealing in simple products.

    2013 is not the end of the cull but rather just the next attempt.

  10. RDR, no problem. Not sure if I need to take all RO exams, or a few written exams before it gets to chucking out time, but hey that is what the FSA want to do to IFA’s anyway. Now where’s that painting & decorating course prospectus!!

  11. Janet Walford OBE (editor of Money Management) is not paranoid enough to think that RDR is about getting rid of IFAs. But she isn’t an IFA. I (as an IFA with 17 years experience and already diploma qualified) am paranoid enough to believe that geting rid of IFAs is the whole point of RDR.

  12. Crazy gang IFA member 1st October 2010 at 10:49 am

    I like it when something comes together (not) ! This will be a painful time for many advisers. People employed by the FSA have no stake in the industry like we have, they are just public sector employees doing as their told. When the outcome is whether or not you will be able to earn a living in the future and pay your mortgage, this is of no concern to them as it is much more personal. I think the autocratic and assumptive way this has been handled is a disgrace. As Patrick McGowen said in the prisoner ‘I am a human being not a number!!’

  13. The FSA needs to have in place a separate catstrophe plan to deal with the reality that consumers will be the ultimate losers under the RDR.

    If the intention is to eductae consumers, enfranchise them, provide them with confidence, entice them into engaging with advisers and paying less for the privilege then all will fail and the current crisis will reach epidemic proportions.

    Of course, the architects have already jumped ship and the current RDR purveyors will also be gone by 2013.

  14. Well observed and put. At least now we are getting informed observations and noises in print warning us about the impendeing disaster. Albeit, after forecasting it on the shop floor for 2 years.

    Unfortunatley, the vested interest groups have unduly influenced the regulator for too long with smoke & mirrors.

    Hopefully, the FSA’s disaster mitigation plan will work or someone will eventually turn the light on before Jan 2013!!!

  15. but this is what The FSA want, get rid of all IFA’s and leave the path clear for thier cronies, the banks. IFA’s do not wear the right ties and have to much knowlegde so the best thing to do is get rid of them

  16. ‘ They will know where people are in terms of exams but they will not know exactly in terms of model.’
    I don’t think they will – I believe that, with current pass rates in the 50%’s, there will be a backlog that they are unable to deal with. With paper marking (for JO’s)n the order of 7 weeks after the exam and that they are only run 3 times a year many advisers will either run out of time or be forced down the RO route but will they have enough examination centres to handle the demand? How then do you deny IFA’s a living (legally) purely because they are physically unable to find an exam centre. The pressure is building up already in test centres (admittedly for ‘bulk’ bookings) although the CII insist they can cope with the extra demand. We shall see.

  17. Consultation ? No Client of mine has been consulted about the RDR although its effects will be fundamental to this once proud industry.

    I tried to answer the last on line “consultation” and was not allowed to proceed (after about half an hour) and copious telephone calls because I refused to give a fictitious answer to the question half way through “what will RDR cost your business” (the answer was how can I possibly know ?) Small wonder that so few replies to “consultations” are logged. I then contacted the initiator of the online questionnaire by email (from AIFA – FSA do not publish the email addresses of top management !!) – to date no response !

  18. Cii Gap fill.

    I’ve just had a look at this site and it says I have many gaps! Even though I am an APFS and CFP.

    Oh well…when I looked at it in more detail, it seemed quite straightforward. It said I had gaps in ISAs, VCTs and the like which are not a problem at all.

    Some of the other areas highlighted were stochastic modelling, tactical vs strat. asset allocation and so on.

    Now I think this is really good as it does highlight some areas which need revisiting and others which are so simple its laughable.

    Why are others complaining about this tool which is designed to help us?

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