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FCA chief Martin Wheatley: Advice gap not just caused by the RDR

The advice gap has been caused by a number of factors and not just the RDR, according to FCA chief executive Martin Wheatley.

Speaking at a press conference in London yesterday, Wheatley said it is “difficult” to say the advice gap was caused by the review.

He said: “An advice gap stems from all sorts of things, like tax and Government policy.

“There has been an underlying decline in the use of advice and the level of savings and investment.”

FCA long-term savings and pensions director Nick Poyntz-Wright said: “There are underlying factors driving savers’ behaviour, and there is some evidence that saving levels were already reducing in the years leading up to the RDR.

“So proving what caused the advice gap is one issue, and gathering data on the advice gap is also difficult because you are trying to capture data on what consumers have not done – the extent to which they have not acted or saved.”

Wheatley added that the FCA will be carrying out research this year on the extent to which the advice gap has led to consumers failing to invest or save.

He said: “There are lots of people saying yes there is a gap, but what we find very difficult is to work out is that translating into people not only being priced out of the market, but being put into a position where they’re not saving or not investing.

“That is an important piece of work for us, and one we are going to spend some time looking at over the next year.”

The FCA has appeared to send mixed messages over the RDR’s impact on advice in recent months.

In September Wheatley said the post-RDR advice gap is a “concern”, while FCA chairman John Griffith-Jones said in October he is alert to the advice gap and wants industry solutions.

However, FCA director of supervision Clive Adamson has also suggested “it is not clear there is an advice gap”.


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. There may well have been a decline in the numbers of those seeking advice around savings however it was a steady, gradual one. The RDR has, without any doubt, brought this to a cliff and thrown it over the edge. You only need to look at providers statements on the almost vertical fall off on the regular savings market to see what has happened.
    As for regular pension planning for the self employed – errrrr….. What planning?
    I think the FCA should gater data from providers to see just how much advised business has been done (overall) on a facilitated charge basis compared to a non-facilitated basis and when they see just how big the difference is in favour of facilitated AC then maybe, just maybe they will see how much of a total cluster…. this whole RDR fiasco has been.

  2. Head in the sand again. Advice was readily available before RDR. RDR comes along advice for certain people stops socannot lay the blame on FSA/FCA as it must be something else. Why cannot the FCA see that they have ruined the financial sector and admit it

  3. Does this mean that if we ever get to a position that advice take up improves, complaint falls or the UK saving gap closes that the FCA wont try and claim this as their success due to RDR. Cant have it both ways !

  4. This appears reasonably balanced to me, as they aren’t saying that the RDR hasn’t been a factor but that it isn’t the only factor. At Martin Wheatley’s inaugural lecture which was on Behavioural Finance, the Chairman of Which, Patrick Barwise , stated that the RDR is a social experiment the results of which will not be known for a decade or more. This seemed to me to be the most sensible comment ever uttered from someone from Which, and the most realistic comment on generally establishing the impact of regulatory changes.

  5. Wheatley is correct, the RDR is not solely to blame but the point he is missing is that the implementation of RDR has made things worse. Surely a key aim of the financial services regulator should be trying to increase the accessibility of financial services. Something the RDR has clearly not done.

  6. I’m afraid I can’t agree with the above posts. In my own opinion (for what it’s worth) I think RDR has little to do with the advice gap.

    I think Mr Wheatley has understated it somewhat (for political reasons?). The major reason we have an advice gap is because our economy is based on people spending money they don’t have on the high street. The average person hasn’t had a rise for 5 years and their bills have risen inexorably – Power, fuel, food and taxes.

    If our leaders were to institute (for example) credit controls then watch the savings ratio increase. Those whom many in our industry lament as not saving didn’t save much in the first place anyway. Those that do save and have the wherewithal to do so have been hampered and discouraged all the way along the line and thrown a meagre bone of paltry increases in the ISA allowance. Just remember that the full allowances in years gone by were: £6,000 into a PEP. £3,000 into a TESSA initially and £1,800 subsequently and £3,000 into a single company PEP. So we have in fact gone backwards, particularly when you factor in inflation since. And I’m not even mentioning the decimation of pension saving and the limits imposed. All down to Government policy and nothing to do with Regulation. Mr Wheatley knows they are numpties in Westminster, but can’t say so.

  7. So ~ if savings and the take-up of advice in that direction were already in decline, was it in any way a good idea to impose the RDR and make advice even less accessible to the mass market? Apparently Adair Turner seems to think it was, whilst Clive Adamson claims there to be no advice gap and Martin Wheatley has expressed concerns about it but so far hasn’t come up with any measures to reverse the process. What a great state of affairs.

  8. So RDR can’t directly be blamed for advice gap because the information available doesn’t directly back this up.

    Meanwhile RDR was introduced on the back of no actual evidence, the FSA admitted this, that there was commission bias.


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