All the proposed changes in the retail investment market have an originating objective but the focus too often drifts to the need for change rather than delivery of improvements.
The industry must be given an opportunity to develop – encouraged by regulatory incentive as well as censure – to enable better consumer outcomes. It is becoming increasingly difficult to see how consumers are not going to be negatively affected during the process of significant change.
Much of the debate has centred on the RDR but there is a great deal more which could have an even greater impact. The potential effects of the RDR are only partially understood.
Although a drive to increase professionalism is logical, the approach is likely to see a further percentage of people lose access to advice. Regulatory incentive could address this objective in a more productive way.
Additional capital requirements for personal investment firms will be phased in from 2011 and changes to the mortgage market will affect around 60 per cent of IFAs.
Then there is the revision to the insurance mediation directive for early 2012, as well a revised markets in financial instruments directive, the introduction of packaged retail investment products and Solvency II. There will also be an amended regulatory architecture at UK and European levels and the introduction of auto-enrolment.
The regulator seems to have forgotten many of its original objectives and little in the proposed changes will make it easier for the industry to deliver better consumer outcomes or increase access to advice. Equally, with so much change planned, together with the associated cost burden, it is difficult to conceive that consumer confidence will improve as a result.
Tenet supports many of the principles for change but is increasingly concerned the magnitude and impact on businesses and individuals will fail to deliver a more positive marketplace.