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FCA chief Wheatley defends simplified advice paper

The FCA has defended its recent paper on simplified advice after regulatory experts criticised the document for “solving nothing”.

In July, the regulator published the findings of its thematic review into simplified advice and non-advised sales, alongside a guidance consultation which aims to clarify the boundaries of simplified advice.

At the time regulatory experts told Money Marketing the consultation “solves nothing” and “raises more questions than it answers” because it fails to say how simplified advice would be regulated or how claims to the Financial Ombudsman Service would be treated.

During a Treasury select committee hearing this morning, Conservative MP Steve Baker cited that Money Marketing article and asked FCA chief executive Martin Wheatley if he was disappointed in the response to the consultation.

He said: “No, quite the contrary. Inevitably everything we put out will get a few critics, but most of the reaction to the consultation was a lot of people coming forward and saying: ‘at last the regulator is prepared to listen to us when we say we can’t quite fit into your regulations or you are a barrier to how we want to operate’.

“We’ve run [six] roundtables since and we’ve had lots of engagement with the industry, both small start-ups and established firms who are very keen to engage with us about how we move things forward. I agree with the comment that it didn’t answer questions, it wasn’t intended to – it was a chance to actually raise the questions about what more we need to do.”

Baker also pressed Wheatley over the size of the advice gap since the retail distribution review was implemented.

He said: “My constituent Gary Heath has been agitating on this and fairly successfully and went through FCA figures and indeed your own interview with Money Marketing. Numbers he’s given me are that, with IFAs exiting the marketing, that leaves 3.8 million people without advice.

“With banks reducing the advice they give he adds another 4.2m people. He also thinks by the time advisers have top-sliced people able to pay fees he estimates about 15 million people will be without advice. Do you consider this a serious problem?”

Wheatley said he did not think the gap was as large as Heath suggested and although there had been a drop off in adviser numbers in the run up to the RDR that had not continued.

He added that “all the major investment banks” are looking at how they can develop a simplified advice model and some smaller firms are also looking at entering the market.

He said: “I think we are seeing a wave of innovation coming in through the market. There is a lot of investment going into financial technology and innovation and we are trying to…make sure we can encourage it.”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Basic stuff really ignore and dismiss, any independent figures given to you (sorry Gary Heath), and agree with any negative statements to your own research, stating that’s the results you were looking for to enforce your arguments !!

  2. So Wheatley thinks “Inevitably everything we put out will get a few critics”
    It is VERY easy to measure just how many critics of simplified advice there are in the advisory community
    Derek Bradley at Panacea has run surveys, MM do their polls and if the FCSA want to eb REALLY clever. the FCA has the FCA number of every single adviser, while all directly regulated firms also have on-line secure access to FCA for the FCA returns and fees, so they could ensure everyone only voted once.
    Come on Mr Wheatley we live in a democracy so ignoring the “few critics” when there is a democratic way of proving your claim that it is just a few” right or wrong is relatively easy and cost effective.
    But then the FCA is undemocratic, not subject to legal scrutiny and ignores parliament as much as it can.

  3. So its a start, Its on the record and Parliament has started to take notice.

    So are you going to support or are your going to give up?

    We can get real change if we work together, get some funding and push back.

    All that’s been missing from IFA Representation is a willingness to fight for the clients and the advisers

    We can make real change to the accountability of regulation, particularly in an election year but I cant do it on my own – Go to http://theheathreport.com/new-custom.html and fill in the survey

    Then go to http://theheathreport.com/funding.html and give us some funding

    Simple choice IFAs – You wait for trail to run out or the regulator to interfere in the way you charge or you push back

    Garry Heath

  4. The real problem is not now it is between 5 and 10 years time, when many advisers will retire.

    I wonder, what is the average age of the currently regulated advisers, how many new advisers are there being registered each year and when do they intend to retire?

    I would suggest if the question was asked in this format the results would be very, very worrying.

    I only need to look around any PFS/CII meeting to realise that there are very few spring chickens advising (myself included).

    As for simplified advice, its been tried before, suggested before and is the reason we are have many of the complaints and miss selling headlines built up over the last 20 years.

  5. “Wheatley said he did not think the gap was as large as Heath suggested”. And the data on which this statement is based is what exactly?

    Garry Heath ~ All that’s been missing from IFA Representation is a willingness to fight for the clients and the advisers. On whose part?

  6. Denial or ignorance, not quite sure

  7. What was the point of RDR if millions of people already have the necessary skills and knowledge to make decisions using a simplified advice process !

    Why don’t the FCA admit that they are trying desperately to sweep under the carpet the mistakes they have already made whilst called the FSA led by that great master of all things financial – Sir Hector.

    How many more millions must be wasted ?

  8. @ Julian. Well not me Julian – handed over that baton in 1999 to people, who with the exception of Paul Smee, have allowed the regulator to walk all over them.

    Directly Authorised IFAs have no representation as the networks run APFA

    Need to get things moving or learn to shrug in a gallic manner. The changes in Trail have devalued IFA businesses by £5bn and the reaction from the sector Nada

  9. What next? Simplified brain surgery?

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