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.”