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Consumer Panel chair: RDR failed to improve trust in advisers

The RDR has failed to improve consumer trust in financial advisers, FCA Consumer Panel chair Sue Lewis says.

In an article for Apfa as part of a series of reports to mark the trade body’s 15th anniversary, Lewis says “not much has changed” in the past decade.

She says the RDR should have made a big difference to consumer attitudes, but cites a recent Personal Finance Society survey which found that less than a third of people who had not taken advice were aware of the new emphasis on professionalism and transparency.

And she says progress has been further hampered by some firms seeing regulation “as something to be challenged or evaded”.

Lewis says: “Successive FCA reviews of RDR implementation have found problems, such as the use of ‘in kind’ inducements to advisers to sell particular products, and failure to disclose costs fully.

“How can firms expect to be trusted when they demonstrate repeatedly that they are not trustworthy?

“It seems fair to say that not much has changed in the past decade or so across the industry, although we have not yet seen the full impact of a dedicated conduct regulator.”

Lewis says the biggest change for the future is likely to be an increase in online sales.

And she warns that problems identified with online annuity sales by the Consumer Panel, including lack of information and hidden commissions, also read across to online investment sales.

Lewis adds that the pension reforms announced in the Budget are an opportunity for advisers to demonstrate they can put advisers at their heart of their businesses.

She says: “So, what do consumers want? First, people need to feel their adviser is ‘on their side’.

“They need to understand when they are being advised (in the common usage of the word) and when they are being sold a product. People want straightforward products that they can understand, simple choices, and no jargon.

“They want to understand what, exactly, they are getting for their money and, ideally, to be able to judge the performance of their adviser.”

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Comments

There are 26 comments at the moment, we would love to hear your opinion too.

  1. “And she warns that problems identified with online annuity sales by the Consumer Panel, including lack of information and hidden commissions, also read across to online investment sales.”

    Sorry but this is half of the problem we face as advisers – the failure of those commenting on things being unable to tell the difference between ‘advisers’ and exectution only services.

  2. “How can firms expect to be trusted when they demonstrate repeatedly that they are not trustworthy?!!!!

    I must say I really take exception to this comment. This lumps everyone together as bad! The BANKS caused the mistrust – not the dedicated, professional and much maligned adviser community!!!

  3. FCA fails to hit targets …. AGAIN!

    How much did the RDR cost? How much further forward are we??

    Still, the good ADVISERS, ow which there are many, are still being tarred by the bad ones and a continued lack of clarity imposed by the FCA

  4. The FSa failed to maintain consumer confidence, not advisers.

  5. Sue needs to get out more, engage with the vast majority of competent advisers and understand that sitting in an office with her other “consumer mates” is no substitute for finding out what is really going on.

    At the same time she might well then learn (as Sean points out) the difference between “advice” and DIY

    Some degree of trust might also start to return when we have commentators who know what they are talking about. Sadly the FCA Consumer Panel seems, like the MAS, to be pretty much unfit for purpose

  6. “Cites a recent Personal Finance Society survey which found that less than a third of people who had not taken advice were aware of the new emphasis on professionalism and transparency”.

    Why on earth would somebody who has not and possibly will; not take advice be aware of new rules.

    Frankly, those consumers who do take advice think that the ‘new rules’ are somewhat pointless.

    The FCA Consumer Panel must not perpetuate the view that all advisers are bad and, for its own relevance, it must ensure that it actually knows what it is talking about before making public utterances.

  7. Stupid:
    RDR was never meant to improve trust in advisers !!!! it was meant to demonstrate something positive was being done and get rid of the bad and retain the good
    The jury is still out on weather either was or going to be achieved, if the regulator was so impressed in the merits of the RDR do you not think they would be shouting from the roof tops and gloating about how right they were to think of it !!

    Well Sue Lewis, the saying is right; ignorance is bliss !!

    Agree with Donna, about your comment and swiping statement, one bad so all are bad !!!

    Hope AFPA didn’t pay you for this article if they did in the words of Ian Dury “what a waste”

  8. She would do well to justify and quantify “repeatedly that they are not trustworthy”

    In 32 years in the industry, I had 4 complaints all of which were rejected. But I am not a lone example and Sue Lewis should be ashamed of her observation which condemns us all . Is this mass defamation of character, and can we take suitable individual action against her?
    “Every time I open my mouth some fool speaks” (teacher to a class); think about it Ms Lewis

  9. All that matters to me is that MY clients trust me.

  10. Here we go again some well paid office based person spouting off about things they haven’t a clue about. Has this person actually done the job or are they experts because someone gave them an official sounding title? How on earth can she say; nothing has changed? Is she actually saying RDR was an unmitigated disaster that cost a fortune to implement, and without any perceived benefits to the customer? Which organisation uses so much jargon and insists it’s all cascaded down to the consumer you need buckets to explain anything? Answers on a postcard please.

    “They need to understand when they are being advised (in the common usage of the word) and when they are being sold a product. People want straightforward products that they can understand, simple choices, and no jargon.” All well and good but in reality is this even possible.

    Then of course there’s the 18 page suitability reports we’re forced to write because the networks and advisers are so scared of being damned to hell if they forget to include something.

    I think she needs to put her own house in order first before she starts lumping every adviser (good and bad) together and using one or two examples to justify her obvious prejudice. What is incredible is someone in her position actually coming out with such a statement. Unbelievable.

  11. Firstly she doesn’t seem to have any evidence for her “trust” remark and refers to a PFS survey which appears to be about how little the regulators have done to explain the RDR to the public.

    Maybe she should try getting some facts first before making silly and ill-informed comments. Why not try asking the clients of some long standing financial advice firms whether they trust their adviser. I bet they do. You see,Sue Lewis, long standing firms CAN ONLY HAVE A BUSINESS because their clients trust them. No-one leaves money invested with a firm they no longer trust (see Northern Rock 2007 for proof).

    Of course, if it was demonstrated that financial advisers could be trusted there would be no need for an FCA consumer panel would there….

    This smacks of self interest. She is actually harming consumers by quoting hearsay as fact and not bothering to understand and investigate places where consumers are well served. By doing so she harms good advice firms and consumers.

  12. Not sure what “in kind” inducements are. any clues? Running a small business, generating income by advising clients not product sales does not seem to fit the bill. From an investment and to a large degree pension perspective haven’t dealt with a life office for some time in respect of new business and many of the platforms/wraps do not have the ability to pay inducements (or at least those that I deal with) nor would I want them to. SO where does this belief that as advisers we’re on the take come from.

  13. So, RDR not being ‘successful’ is down to the Advice community and not all the mistakes made by the FCA.

    I’m sorry Ms Lewis, but your comments are not ‘trustworthy’.

    Can the FCA be run more incompetently ????

  14. Sue Lewis really needs to sit herself in a quiet room and think about her actions. In this one article sha has managed to:
    1. Confuse advice based sales with DIY sales
    2. Suggested firms ‘evade’ regulation. (I haven’t mentioned challenging regulation because surely that is acceptable)
    3. Stated that “in kind” inducements are being used to bribe advisers to use certain products/providers
    4. Suggested that nothing has changed in the last decade.

    I can’t believe the anti-adviser sentiment that Sue Lewis appears to have as suggested by this article. I would challenge her, as others have, to engage with advisers and our clients to find out exactly what we are up to. I agree clients want straight forward products, to be able to understand what they are doing and trust their own adviser is acting on behalf of them and not a product provider. I wish i could have a huge salary for figuring that out. Instead i figured it out years ago and have been applying it to my clients since then. Didn’t the FSA look into provider enducements and find their was no evidence of a widescale problem so how come Sue Lewis now assumes there is despite providers not having the facilities to do this?

    All the advisers i know work on behalf of their clients and are trusted by them all. The issues we and clients face usually stem from over restrictive regulations, a financial ombudsman whose decisions can’t be trusted and a media that is all to quick to paint advisers as lying theiving scumbags.

  15. The problem is very simple, the consumer is being constantly told there is a problem. They have had twenty years of being told, pensions are rubbish, advice is expensive and we are all fraudulent crooks. Intelligent members of the public have ignored this a sort an adviser to work with and over the years trusted.

    So, if you want to get the consumer interested, engaging in financial advice and products, start telling them the benefits, show them the cost of doing nothing and what advice should look like. This would be far more constructive than the MAS.

    THIS WOULD NOT SELL NEWS SO WILL NEVER HAPPEN.

    In 8-10 years I will retire, I want it on record that I stated that we will have a review costing billions sometime soon to find out why it all went wrong, why there are no advisers, no one wanting to provide advice and only government run savings schemes. The review will be undertaken by those that have caused the problems in the first place and the blame will be pointed back at the advisers and industry (sound familiar). In the mean time the Government will use NEST and other products to slowly gain the lion share of the nations savings.

  16. I looked up Sue Lewis’ background before acting as the Chair of the FCA Consumer Panel, and she is described as a career civil servant. I then looked at the background of the remaining members of the FCA Consumer Panel and found that the vast majority of members were either also civil servants, policy makers, academics or researchers, with one lawyer and a couple of professional journalists. Given the circles within which she moves, it comes as no surprise to me that Ms Lewis appears to have made the statements contained in her article for the Apfa. To be fair to Ms Lewis she would be right if she said that SOME advisers have sought to evade regulations. To be fairer to the advice community, she does not seem to have any evidence or direct examples that regulatory avoidance, inducement and lack of trust is endemic amongst all or most advisers. And as Alan Lakey so rightly says, if you ask people’s opinions on things which they have never personally experienced how can you expect them to know what has and hasn’t changed? If I were to be guilty of the same truth crime as Ms Lewis then I might make the sweeping generalisation that all members of the FCA and all aspects of the regulations controlling financial services are bad. But I am equally sure that is as unfounded as Ms Lewis’ lazy comments. But probably more accurate than her remarks…..

  17. When no one outside of the industry was made aware of RDR thanks to the cobbled together FSA package are we surprised by these viewpoints and numbers, particularly when the legacy issues are still headline news (PPI ) and very close recent past (endowment & pension review).

  18. The issue here is awareness of the RDR and most of the public are not going to know about it unless an adviser tells them. A PFS survey saying that 2/3rds of those without advisers do not know about the RDR changes is not surprising!! To infer anything form this about the way advisers treat their clients is just ridiculous; the point is that they have not had any adviser contact!
    ADVISERS CANNOT CHANGE THE MINDS OF PEOPLE THAT THEY HAVE NO DEALING WITH!!!!

    Having said all of that, if Sue Lewis could suggest any way that the industry as whole would be able to improve its image to people who do not engage with advisers, that would be very helpful. (Hint: providing good advice for clients regarding pensions is not really anything new and would not help those that do not get advice).

  19. What absolute tosh. Yet again from this hairy jumper, vegetarian body of know nothings. Which advisers? Which clients.? Not my experience at all and I know not the experience of many others. Sure if you are not a pure independent able to set your own tariff then it might be the case – might.

  20. Nice one Sue, you certainly seem to have scored highly and made an impact with your views.

    I hope your paymasters are pleased with you…Oh, hang on.. That’s us isn’t it?

  21. Anyone above actually read the article?

  22. Mathew @11.22 am

    Yes

  23. @Matthew – The MM article or the APFA article?

  24. @Matthew.

    The MM article quotes actual statements from the APFA article. The comments that are based upon the statements quoted in the MM article are enough to take issue with in their own right and, given their nature, cannot be construed as being taken out of context, so your point is please?

  25. Wansn’t making a point. I was asking a question.

    I thought someone might be able to add some colour to the article to determine if the above comments are just or not.

    Thats all.

  26. Not sure what “in kind” inducements are. any clues? Running a small business, generating income by advising clients not product sales does not seem to fit the bill. From an investment and to a large degree pension perspective haven’t dealt with a life office for some time in respect of new business and many of the platforms/wraps do not have the ability to pay inducements (or at least those that I deal with) nor would I want them to. SO where does this belief that as advisers we’re on the take come from.

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