View more on these topics

Experts who helped draft RDR plans warn of perils

The FSA has come under attack from leading retail distribution review committee members, with True Potential’s David Harrison warning that it endangers the IFA channel when consumers need hundreds of thousands of new advisers.

Two committee chairmen, Royal London chief executive Mike Yardley and Thinc Group’s Roderic Rennison, have warned that more incentives must be offered to support the general financial adviser category or it could wither away.

Rennison also claims that primary advisers might earn more than GFAs under the current proposals.

Speaking at Osney Media’s financial services distribution summit in London this week, Harrison claimed that the UK needs 150,000 to 200,000 advisers but the RDR will decrease that number.

Harrison, who sat on the regulatory barriers and enablers group chaired by FSA director of retail policy Dan Waters, challenged the broken model and said: “How do we know the model is broken? Just because Callum McCarthy said so? What statistics did he provide us with as the basis of this?

“This is the second or third time in which they have tried to stop IFAs. Our evidence suggests that consumers like IFAs. There is an undersupply. There should be 150,000 to 200,000. If you damage the IFA channel, it is highly dangerous. The consumer trusts the IFA more than the banks. They use the banks because they are there.”

Yardley said: “It looks as if GFAs are being squeezed at the moment. There is a very real danger that this category will wither and die. If we do not focus on the GFA, there is a real risk that their sustainability will not be secured.

“There should be more incentives for people to be in the GFA role through a lighter regulatory regime.”

Rennison said: “There is a void to fill between primary and professional which must be filled by GFAs. It should be part of a career path where you are encouraged to become a PFP but it is also good to remain at GFA level. One of the anomalies of this is that primary advisers could be earning more on commission-driven sales than GFAs. I think that anomaly will remain for some time.”

Recommended

Investors focusing on corporate profits, says BlackRock

Investors are beginning to focus on corporate profits to gauge how well companies are holding up amidst the slowing economy and ongoing credit problems, according to BlackRock. Vice-chairman and chief investment officer for global equities Bob Doll says estimates for third-quarter earnings growth are around 5 per cent, which Doll says may be too high. […]

The good, the bad and the Police

It was a mixed bag last week in the world of regulation. Aifa welcomed the FSA’s decision to press ahead with the proposed reform of the Financial Services Compensation Scheme.

1

Investec to continue providing funding to Unity Homeloans

Unity Homeloans will continue to be funded by Investec when it relaunches it sub-prime product range. This comes after Infinity Mortgages – which withdrew from the sub-prime market at the same time as Unity Homeloans and also backed by Investec – has stated that it is currently talking to other potential backers as Investec has […]

Sunny side up

Long-term investors are seeing Japan in a more positive light

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment