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FSA came close to scrapping RDR

The FSA considered scrapping the retail distribution review at a board meeting in March but decided to push on with plans for fear of “losing face”, according to Lansons director of regulatory consulting Richard Hobbs.

Speaking at the Protection Review conference held in London yesterday, Hobbs said the FSA came close to ditching the RDR as recently as four months ago and claimed the regulator is “not particularly proud” of the review.

Hobbs told delegates that he expected the RDR to continue, despite rumours to the contrary, after it was announced the FSA would be replaced by a prudential regulatory body at the Bank of England and a new Consumer Protection and Markets Authority.

He said: “As for the RDR, I guess that will continue to completion. There are a great many rumours around the market that the RDR is to be pulled – I think that is completely untrue. I might have to eat my words but my view is it will carry on.

“I have to say, it only just survived an executive committee meeting in March at the FSA. The FSA are not particularly proud of the RDR but it is a question of losing face, so I think they will carry on.”

The FSA held a board meeting on March 25 – one day before it published its RDR policy statement, the RDR discussion paper on the platform market and a consultation paper on pure protection sales.

Summary minutes from the meeting show that aspects of the RDR were discussed including the consultation carried out on the RDR up to that point and in particular comments from the consultation on adviser charging and additional compliance costs.

At the FSA’s Annual Public Meeting in June, chief executive Hector Sants stressed that the RDR would go ahead under the new regulatory regime.

The FSA declined to comment.

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Comments

There are 59 comments at the moment, we would love to hear your opinion too.

  1. Something had to be done about consumers being ripped off by a massive grab for commission.

    Is RDR the right way to do this?

    Ask yourself one question: “Who is and was the most guilty of generating by far the most customer complaints and will this impact those companies?”.

    Is this 2 questions? I’m not sure, but I know the answers:

    “The banks” and “no”.

  2. A bit ironic they could not make a decision to scrap RDR, unlike the new goverment who did not waste too much time scrapping them.

  3. We all make mistakes, why can’t the FSA admit that they have made a mistake with RDR that way should they try to impliment the terms outlined in the MMR papers this week, they will have set precedent to change their minds!

  4. “Fear of losing face” – That’s ok FSA you have no credibility anyway so from that starting point you cannot possibly ‘lose face’.

    The FSA should not be in the least bit proud of this shambles. Actually it could go some way towards regaining face by coming clean now, admitting they are completely wrong & abandoning the RDR.

  5. Stephen Rowland 16th July 2010 at 10:56 am

    So what all this fuss about the RDR comes down to is that they (the FSA) don’t really believe in it at all but to stop losing ‘face’ (& probably their own jobs!) it has to be forced through!

    It doesn’t matter that clients will be forced into the arms of the Banks (like Lambs to slaughter) & thousands of IFA’S will either leave or go to the wall – as long as they save face!

    Says it all really!

  6. Ha

    Is it April Fools Day ?? !!!!

  7. I am unsurprised but bitterly disappointed that logic did not prevail at that meeting but am hopeful that continuing and mounting pressure from all parties will bear fruit. It isn’t a matter of losing face, it is a case of being pragmatic.

  8. Upon reading the headline my first thought was “but they would lose face”. If these comments are true then RDR should not survive in its current form.

    If it’s possible to have a flat rate of commission across all products (i.e. nil as RDR insists) then there can be a flat level that serves both consumer and the industry alike. For example, what would be wrong in having all investments pay 2%. Those advisers that want to earn more will have to do so by charging a fee.

  9. Kelvin Lillywhite 16th July 2010 at 10:59 am

    Absolutely typical of the FSA, everyone else can see there are flaws in aspects of the RDR and the FSA obviously do but rather than admit their mistakes they choose to “carry on regardless”. It’s nice to know that the FSA wont be losing face over this but many in the industry will be losing their livelyhoods. Isn’t it also always strange when the story is negative about the FSA they’re never available to comment!! They’re a disgrace. The move to the bank of england will do nothing to change that. It’ll be exactly the same people, behaving in exactly the same way, making the same mistakes, picking up the same bonuses but with a different letter head that costs us in the industry millions of pounds to come up with because they’ll bring in some design consultant to do it.

  10. The FSA losing face how can they. They have been a complete shambles from day one so losing face is way down on the packing order. They would probably be recognised as a sensible regulator if they did get rid of the stupid RDR which was obviously thought up by a 22 year old graduate with years of experience

  11. ……the regulator is “not particularly proud” of the review.

    Implementing a strategy that you are not happy with…I would not do that for a client of mine!!

    I wonder if a defence to the ombudsman of ‘I didnt chance my client report ‘for fear of “losing face” would now stand up?

    Does TCF apply one way only?

    Not saying I dont agree with significant elements of the RDR from my own business perspective, however, like most people (and now apparantly the FSA themselves), I can see massive flaws in elements of the RDR. Sort these out, dont just impose legeslation that has elements that dont benefit anyone and cause problems for everyone!

  12. The RDR is a disaster waiting to happen,too costly and will decimate the finanacial services industry,the only industry this country has left.The vast majority of clients do not want to pay fees,but I don’t suppose anyone has asked them if they want the RDR either.

  13. Well after years of over-regulation of IFAs and under-regulation of the banks, I’m pleased that I’ve decided to pack it in after 30 years. It says it all when the FSA can’t admit their own mistakes – the RDR in its current format will be an astonishing failure.

  14. I work in FS recruitment, only this week I have been speaking with good long standing IFA’s who told me they are leaving the industry within the next 2 years due to RDR. Given this announcement it is utterly disgraceful that this can be allowed to continue. Every IFA in the UK should comment on this message, something needs to change and change soon.

  15. Peter J Chesworth 16th July 2010 at 11:17 am

    I have the exams, as a practice we are already fee charging only but I will reluctantly be retiring on 31 December 2012 if RDR goes ahead. The present level of bureaucracy is insufferable but looks as if it wil be nothing as compared to the post RDR world.

  16. Surely the way forward is not for the FSA to go negative and ‘carry on regardless’. They would do their credibility a world of good by saying that they have got quite a few problems with the RDR and they are going to address these to get it right. When it is sorted then it will be introduced. They do not ‘save face’ by implementing substandard rules and regulations, only make a bad situation worse.

    Yes this does seem more like a ‘job retention’ strategy than a genuine desire for good regulation.

    About the level of professionalism we have come to expect from the Regulator.

    Perhaps we should coin a phrase ‘Doing an FSA’ as in ‘Making a complete b…s up that costs a lot of people a lot of money and denying any responsibility’.

  17. When the FSA is scaled down, will they be shedding the majority of their 3,000or so staff, who will no longer be needed, or will they continue to find jobs for them on the basis that IFAs will always have to cough up the funds to pay them?

  18. Well I never. If at the meeting it was considered a possibility of pulling the RDR, then it should be done. If there is any doubt, pull it now accept failure and if need be take a long look at why they wanted to pull it, keep any good bits an ditch any bad bits. The main bad bit is to make thousands of people who have experience lose their occupation and income on 31st December 2012. There are not enough part time jobs in Tescos Sainsburys and the like to provide full employment now let alone adding another few thousand on to the dole.

  19. So thousands of Financial Advisers are being forced to spend time and money implementing a review which the FSA ‘are not particularly proud of’ and has only survived because the FSA is fearful of losing face. What is even more damaging is the thousands of Financial Advisers leaving the industry due to the implementation of this review. Surely the statements by Richard Hobbs should be grabbed by organisations such as AIFA and demand that the RDR be scrapped.

  20. My major concern is my clients. I had an annual review with some long standing (15 years) investment clients a couple of weeks ago. They are not “high net worth”, just ordinary people who have about £100k invested. They had been reading the papers and were concerned that this review would be our last because they didn’t want to pay me fees to review their investments. So, ordinary people will be avoiding advice – great outcome!

    Is that what RDR was supposed to achieve?

  21. Sandra Urquhart 16th July 2010 at 12:09 pm

    An utter disgrace!

  22. This can all be so easily sorted. If the FSA won’t come clean to the mistakes they are making perhaps it’s time for our brave new coalition government to step in and make the decision for them.

    RDR is bad for advisers, expensive for providers but most importantly bad for consumers as it will restrict choice and the availability of advice.

    George Osbourne are you listening. It is an opportunity to listen to a vital part of the UK economy and do the right thing, but will you?

  23. The FSA is now a standng joke with zero credibility.

    But they can’t close us down for telling the truth – namely they are useless…why then do so many post anonomously – have the courage of you convictions…

  24. My sympathy is with the customers, who are paying these extra exam costs.

  25. 'ITS TOO LATE BABY' 16th July 2010 at 12:26 pm

    Its too late for me whatever they do. I had to re-structure my business 6 month’s ago due to a failed previous network. Since then it has been a nightmare getting renewal and initial commission from providers, who seem to think RDR has already taken place. This has caused emmence cash flow problems and after 20 years of service without any complaints whatsoever, I have decided to quit before the ‘hole gets deeper!!. The Industry has been wrecked and is in terminal decline, rather like the manufacturing sector many years ago.

  26. What a great shame. The FSA missed agreat opportunity to revisit the RDR and at least mend some of the gaping holes that have been exposed thus far.

    It shows a childish stubbornness as well as political immaturity. The change of government and the swift austerity measures provided the ideal background allow for RDR to be reshaped.

    Perhaps this revelation (leak) can allow for some adult discussion. RDR as it stands is muddled and ill thought out with more power for detriment than for good. If this does not happen then the regulator will prove itself a gutless and spiteful being and further alienate the IFA community.

  27. People post like that because they do not want to attract wrath. If you have been at the TCF roadshows you will know exactly what I mean. At the one I was at we told them that the reason we were not responding is because we fear reprisals. Did the meeting change then? no. Now I do not want to attract wrath but also I am prepared to stand up and say the RDR is a disaster. The original idea was to some extent sound but it has become a raging monster that will do untold damage. Me? I am half way qualified. Fees? No issue as I charge fees where appropriate. My concern? That commission will not be paid (an aim) but the cost of the commission will not be put back into the products to benefit the client who then has to pay me to advise them. Currently if you are fees only then you are not treating your customers fairly.
    Come on FSA sort this out. Let’s get back to work please.

  28. Neil F Liversidge 16th July 2010 at 12:38 pm

    The whistle has been well and truly blown on the FSA. Every IFA should be writing to their MP today to draw their attention to this. The basis on which the FSA has acted is utterly scandalous.

  29. CLIENTS NO LONGER TRUST THE FSA!! 16th July 2010 at 12:41 pm

    I recently saw a new prospective client who stated that although he trusted me, he did not want to sign any document which was anything to do with the FSA. ‘I dont trust that lot’ he siad. How about that then !!! It says it all. He is a perfectly harmless 80 year pensioner with nothing to hide.

  30. Robert Donaldson 16th July 2010 at 12:47 pm

    Its not just the RDR that is the issue but all the nine yards of rubbish that our industry takes all the time

  31. Proof, if ever it were needed that the FSA are a bunch of overpaid, incompetent, idiotic parasites with no clue of what actually is happening out there and are completely out of touch with sane thinking.However I do believe that they speak quite highly of me.

  32. I have no problems with the concept of RDR but the current proposals are unworkable in some areas.

    My main issue is that RDR does not recognise the role of advice and sees everything in terms of product. A product simply gives tax structure and access to funds.Most new clients approach us nearing retirement with the product already but deeply unhappy. What they are desperate for is Investment and tax advice on an ongoing basis. If they can not afford a fee then the only way to fund the advice is via a new product that would generate customer agreed remuneration. Under current proposals moving product for this purpose would not be allowed.This represents a major flaw and is actually dogma driven. The job of an IFA is to provide advice not sell product and unless RDR recognises this key consumer need it will fail.

  33. Michael Fallas 16th July 2010 at 1:18 pm

    Regulation to save “losing face” is just pathetic and is not the way to regulate

    RDR should be stopped now and proper well thought out method of regulation and consumer protection sought.

    The cost of FSA regulation far exceeds the benefits and is just a huge waste of money and effort you may as well throw away 2/3rd of the money as it is wasted anyway.

  34. Michael Fallas 16th July 2010 at 1:21 pm

    RDR does not guaranteed “good advice” is given or that fees charged are fair.

    It will however encourage many to buy online without advice.

  35. Jennifer Nicholls 16th July 2010 at 1:49 pm

    Is there anything we can do like lobby someone or get a petition signed as this is affecting our livelihoods. My business is suffering and I haven’t the time to study at degree level. This is becoming a nightmare for so many of us. Please can someone make them see sense.

  36. Surely just because commission structure changes to factory gate pricing, does not mean the IFA sector will go down the toilet!

    Providers have been selling products on Adviser Charging for years now, and if IFA’s can survive comfortably using those, why can’t others. Surely one should be able to calculate the amount of commission due, based on hours worked for the client, and then charge it as a fee, or directly from the product as allocation reduction. Only for regular savings where factoring is disallowed does this pose a small issue. As for ongoing income, providers can and will offer a type of allocation-reduction-retainer, as an alternative for FBRC/Trail/RC.

    As for exams and industry qualifications – 2 years to take a couple of exams! not exactly rocket science, and if you can’t answer most questions automatically, should you not be a little concerned about the present state of affairs?

  37. Exasperated me 16th July 2010 at 1:57 pm

    Dewar and Pain, bodgit and leggit.

    They dunnit and gone.

    When will the regulator be run by professionals? When they are qualified?

  38. huw frederickson 16th July 2010 at 2:50 pm

    What larks eh? Even the FSA are aware it seems that RDR is seriously flawed, NEST is a 70s dodgy charging structure nightmare, and the CPMA will cost tens of millions to set up and be ‘tougher’ than the FSA. Thank God I made enough money when the wheels were still on the wagon to do something else for a living. Britain has become a hell hole run by rabid incompetents who don’t want anybody to succeed at anything, I’m off to sunnier climes. Enjoy!

  39. I have copied two statements from other here rather than use my own words.

    1. Not saying I dont agree with significant elements of the RDR from my own business perspective, however, like most people (and now apparantly the FSA themselves), I can see massive flaws in elements of the RDR.
    2. Surely the way forward is not for the FSA to go negative and ‘carry on regardless’. They would do their credibility a world of good by saying that they have got quite a few problems with the RDR and they are going to address these to get it right. When it is sorted then it will be introduced. They do not ‘save face’ by implementing substandard rules and regulations, only make a bad situation worse.

    Now to the implications for teh FSA of plowing on if the minutes indicate it is onlt to avoud loosing face. If legal action is taken against teh FSA for rules which restrict teh right to trade, if the reason for plowing ahead regardless appears to be “to avoid loosing face”, then I think the FSA might loose any legal action and as we fund the FSA, that’s more cost to those who stay in business….

  40. Julian Stevens 16th July 2010 at 3:31 pm

    Nowehere in this report do I see any mention of the monumentally inaccurate (and probably rigged) Cost:Benefit Analysis on the basis of which the FSA decided to launch the RDR. For that reason alone, the RDR should be halted in its tracks before it slams into the buffers. Then again, it’ll probably derail completely before it gets anywhere near the buffers ~ the signs are there already.

    And why will the FSA (patently neither an open or transparent regulator) not publish the feedback it received from industry practitioners in response to its “consultation” on the RDR? The names of the respondents are listed but not what their responses were, so of what value is that? What is the FSA so afraid of revealing to those it charges a fortune for the privilege of being regulated?

    Were the FSA any sort of listening regulator, the possibility of it losing face over what it should never have tried to ram down the industry’s throat in the first place would never have arisen, would it?

    As things presently stand, we have an industry on the verge of all out war with its regulator. What kind of crazy state of affairs is that? Is it any wonder the new government plans to scrap the FSA?

  41. Having read and often laughed at the wide range of comments made over the past 12 months I must admit that I am very disappointed over recent events.
    I am in my 50’s and have managed to get another CII 132 points in the last 12months and felt very pleased with myself when finally awarded the Diploma.
    I fully understand the ‘no regrets’ statements but it appears the level of additional qualification requred is OTT – I take pride in professionalism and want to do things properly and avoid ‘strucured CPD’ which seems to me to be a little hit and miss. Could the CII be looking to profit from change?

  42. Green Eyed Monster 16th July 2010 at 5:01 pm

    It goes to prove beyond doubt now that the original decision to outsource the regulation of financial services to an unaccountable private company funded by leeching on the regulated has been a total disaster. Time for the government to take regulation back into the goovernment fold and the civil service. At least the HMRC can do a uturn on regulation when it realises someting has unforseen consequences. They are not concerned with ‘losing face’.

  43. Instead of eveyrone whinging go to Number10.gov.uk find spending challanges and say your bit of how much the government will save by scrapping RDR, I did. Perhaps if they get enough opinions something may actually happen !!

  44. The FSA will not back down, so the Financial Services industry will be decimated, with Advisers in their droves leaving in 2012. This will leave the banks with their recently trained and qualified staff who are responsible for most of the industry’s mis selling.

    Richard Hobbs said the RDR is a matter for the FSA not him. They are not capable of making a decision in the best interests of UK Financial Services, only to save their face at the cost of the industry

    We must all write to Richard Hobbs asking him to step in and instruct the FSA to abandon RDR.

  45. Peter Callomon 17th July 2010 at 9:56 am

    How many regulators have we had in the last 20 years? How many have cocked it up, only to be replaced by another saying that they would transform the policing of our industry? How many of them were replaced by another bigger, more expensive monolith? Who is picking up the bill?
    Read my lips. The FSA is no different, they just happen to be a little more ignorant than all the rest put together. 9 million words, all paid for by us. Now we have a common sense government make the common sense decision. Wise up to the fact that markets make wealth, not governments. Which means markets should be regulated forensically and not as it is right now, enmasse. God help entrepreneurs if HMRC adopted the same attitude – but they don’t, because they know they are on a losing wicket.

  46. It takes a Bigger Man to admit when they are wrong. The FSA remind me of a set of rules I saw in a taxi rank once Rule 3 The Boss is always right Rule 4 When the Boss is wrong refer to rule 3.
    I have said from the very start that this is down to them believing we (the IFA) are all commission driven and if this is the major concern it is quite simple to fix. A cap on commissions! This would actually make our life easier when researching a product. Eg Probably 95% of bonds can pay 6% upfront so if commission is capped at 6% then the ones that where paying say 8% would be able to put it back into the product and may then be the cheapest on charges overall. The client would know that 95% of the investments researched where shown on an exact like for like basis and could see that No commission bias would be present. Even if you are taking 2% then the list you have would enable you to choose the most suitable regardless of commission taken. This can be applied to all investments, pensions and protection and still provide a reasonable level of remuneration for the adviser. Unlike RDR Simples Job Done!

  47. We expressed our views about RDR to our local prospective Tory Candidates who were tremendous in supporting us against this out of control FSA overpaid shower. I have brought this to their attention again now they have been elected as our MPs. My business is suffering and I haven’t the time to study at degree level. This is becoming a nightmare for so many of us. Let’ s hope they can support us further.

  48. I just hope that Hector Sants makes time to read these comments, he would undoubdtedly squirm. He should look deep into his soul and ask if this really is the way ahead and it should hit him like a freight train that he and his team have made an error of incomprehensible proportion, then he should put it right immediately with grace and honour.

  49. Every element of every business submission that IFA’s make on behalf of clients is now scrutinised in excruciating detail by compliance regimes running around in circles trying to work out how to implement the latest ludicrous regulation imposed by this ex-banker run ‘organisation’ (and I use the term loosely), yet the FSA answer to no-one (as the Government and George Osborne cannot be expected to comprehend what any of this means unless we keep telling them) and do not even try to understand what IFA’s actually do on a day to day basis. The current situation would make advice unaffordable already for the vast majority if we charge realistic fees for the hours we spend processing business, let alone what it will cost to provide advice in future with more and more regulation.
    The banks will be the only businesses to profit from RDR, (perhaps deliberately) and this will be to the huge detriment of our clients who will be forced to suffer at their hands.
    I know this has all been said before but the anger felt by IFA’s rises daily and the service we provide to clients is becoming more and more impossible to deliver right now!
    It is essential that IFA’s highlight their feelings to MP’s and put as much pressure on as possible to delay implementation of RDR until this monster legislation which it has become, gets sorted out properly or abandoned as I completely agree that it looked like it was drafted by a 22 year old originally, and I think that’s being generous, and has been messed about with ever since by people with no experience of front line financial advice, or with any relevant qualifications to boot, most of whom have already left the FSA.
    The whole thing would be a bad joke, if it were not so serious.

  50. Another industry figure speak up against FSA’s RDR! Hobs now joins a very big club:

    Otto Thoresen – CEO Aegon: “The RDR is only helping wealthy customers”

    AXA April 2009:”We will lobby the FSA to make sure the RDR does not mean less are able to access advice”

    David Cox – SuuqeaMarch 2009: “Two million clients could be left without an IFA after RDR – 40% could leave the industry”

    FSCC January 2009: “Financial advice will be less widely available post RDR”

    Institute of Financial Services: “RDR will impair financial advice before improving it”

    Alasdair Buchanan Scottish Life November 2009: “Sales advice is a real cop out and extremely confusing to investors”

    Stephen Gay – Aviva June 2009: “The regulator has failed to consider the danger of adviser charging limiting access to advice for those on lower incomes”

    Lord Lipsey: “Consumers in the middle (not high net worth or money guidance fodder) to be sold products by banks under the contradiction that is sales advice”

    Walter Merricks former Chief Ombudsman: “I think it would be unwise to count on the assumption that complaints from the retail investment world are suddenly going to go down as a result (of the RDR)”

    Deutsch Bank report August 2009: “There has been industry talk of 30% or even 50% if IFAs exiting the industry post 2012, which is not impossible”

    Paul Selly HBOS: “Bancassurers set to benefit”

    Richard Howells Director Zurich LifeJune 2009: “The big question mark is still around what benefit it will have for the ultimate consumer. I am still not convinced that all of these changes, when you sit down with a consumer and explain them, actually give rise to a consumer benefit that I can really hang my hat on.”

    Martin Lewis Money Saving Expert June 2009: “There’s a worrying possibility that the FSA is about to kill off independent financial advice in the UK for all but the wealthy. I do hope I’m wrong. I’m not convinced most people will want to pay for advice. The commission route has the advantage that you don’t pay a fee each and every time you want information; you can go without the worry of laying out cash. What I find most galling though is that bank-based advisers – those primarily responsible for PPI misselling, endowment mis-selling, investment mis-selling and generally poor advice all round are still to be allowed to be remunerated based on the number of sales.”

    Janet Walford OBE, Editor Money Management Sept 2009: “I am not paranoid enough to believe that the FSA has a hidden agenda to do away with small IFAs, but the law of unitended consequences may well mean that this will be the result. This is especially the case when set alongside the myriad of other proposals that are costing some £430 million to set up, with ongoing fees of £40 million pa thereafter, a mind boggling amount of cash.

    Peter Hamilton barrister, Source: Money Management Oct 2009, Scrapping the FSA by Marie Jennings MBE: “The Financial Services and Markets Act does not permit the FSA to cancel an authorisation simply because the FSA has changed its views on what the appropriate qualifications should be….It is one thing to impose new rules for new entrants to the IFA profession, it is quite another thing to disqualify someone who is already qualified.”

    David Hazelton of Tax Incentivised Savings Association(TISA) 30/10/09: The RDR could be detrimental to consumers both in terms of higher product charges and an increase in the cost of advice, warns the Tax Incentivised Savings Association(TISA). Implementation costs for the RDR are being “seriously underestimated” and product charges will consequently have to be raised.

    Bankhall managing director David Golder 03/11/09: “We say write to the regulator, write to your MP. Do not let the FSA get away with some of the things that will lead to the widespread decimation of our industry.”

    Robert Kerr, head of retail distribution development at Scottish Widows says: The RDR could have the unintended consequence of “disenfranchising” the majority of consumers from financial advice. “Our key concern is the RDR proposals will act to drive advice upmarket, with financial advice becoming the preserve of the wealthy leaving mass-market consumers un-served,”

    Nigel Waterson when Shadow pensions minister : “While no-one can object to raising the standards of training and competence, should an emphasis on exams take precedence over on-the-job training and experience? Is the 2012 implementation date practicable given the extra qualifications and changes in systems that will be required to be in place?

    AND NOW: Richard Hobbs Director Lansons Regulatory Consulting 16/07/10: “I have to say, it (RDR) only just survived an executive committee meeting in March 2010 at the FSA. The FSA are not particularly proud of the RDR but it is a question of losing face, so I think they will carry on.”

    Regards
    SIMON MANSELL
    TEMPLE BAR IFA LTD

  51. Very very interesting!

    Bits of the RDR (exam qualifications probably) will no doubt stay but a new regulator may have different views. There are 3 major problems with the RDR:
    – it picks out one sector when the issue is more widespread
    – it’s too easy to shortcircuit : I foresee a rise in single premium business where it makes no difference and a lot of protection business being written as GI
    – it doesn’t differentiate between commission and salary based remuneration.

    A better solution may be a more structured approach to qualifications (lots for complex business, less for the easy stuff) and a cap on commission levels which also applies to salesforce (and sales managers’) bonus payments.

    A lot will depend on who gets the top job at the CPMA – it won’t be Hector Sants for sure so I think we’ll see a different approach.

  52. It would be obvious to a blind man that RDR would be detrimental to the consumer. In my original submission to the FSA, I clearly stated that it would be easy to sort out.
    1. Let the advisers who want to distinguish themselves by qualifications do so. I have never been asked by a client what my qualifications are. Being 2/3 of the way to being qualified, I have learned nothing new, but have ticked a few of the regulators boxes.
    2. Have a maximum commission agreement i.e. 3% initial plus 0.5% annual trail to service the client. The OFT may not like it on competition grounds, but this has to weighed against the needs of the consumer.

    So, instead, what we have is hundreds of millions of pounds wasted on the costs of RDR with no cost/benefit analysis done and no consumer research done to find out that this is what they want.
    The trouble is that the IFA industry is so fragmented and with so many vested interests that it will never speak with one voice to oppose such badly thought out regulation.
    I have never felt so demoralised as I do today with the over-regulation that we are facing and yet the banks seem to be able to do what they want.
    Where are the greater risks to the consumer/economy: a small IFA or a massive bank?

    Unbelievable!!

  53. The FSA losing face, now that could never be!! My clients, the majority who are NOT high net worth are shocked that if they want an investment ISA with their “little savings” they will have to pay me a fee. These clients are my bread and butter and after more that 50 years between us in this industry my husband and I who are now in our early 50s are having to consider a change of career, not an easy thing at any age, but retraining at this age will be very difficult. Unfortunately we are not ‘wealthy’ enough to consider retirement as the FSA would have people believe we earn mega bucks, but once you take into consideration all of our operational costs this is just not true. RDR will just make this worse and only high net worth clients will be able to afford an IFA post RDR. There will then be a massive surplus of qualified IFA’s looking for work. Absolutely disgraceful! The working man will no longer be in a position to obtain Independent Financial Advice. We will have handed everything back to the banks who do what they like and charge what they like.

  54. Steven Farrall 19th July 2010 at 4:39 pm

    The FSA is an utter travesty. How the Hell. How the bloody Hell can this ferrargo be allowed to continue? How long can it going on messing up?

  55. What A shit Bloody FSA Regulator 19th July 2010 at 8:55 pm

    They are all idiots the have no idea about Financial Services, they are going to kill this industry, they are no good for nothing CIVIL BLOODY SERVANTS, over paid don’t do a days work and think they are above every one.
    All at FSA go away and die slowly…don’t destroy the Financial Services if you do you will not bloody have a job…but yet none of you have any bloody brains

  56. Having worked in a bancassurance role for numerous years and leaving to become an IFA purely to give clients bespoke unbiased financial advice above all “”TCF””.

    ITS THE BANKS THAT NEED TO BE REGULATED AND COME DOWN HARD ON!!

    THE CULTURE THEY HAVE CREATED AND PURE ARROGANCE OF THEM IS DISCRACEFULL!!

    only thing is they pull the FSA strings!! Simple as that!!

  57. Incredible, if the FSA realise RDR is flawed, why continue it just to “save face” Imagine if Ford designed a car and were just about to put it into production and found it was not good enough, would they inflict it on their customers just to “save face” !

  58. Who are we kidding, by getting rid of the IFA industry, the FSA (soon to be BoE), will be sending everyone to the banks,,,and guess what happens with all the profits the banks rack up – correct! they’re able to repay the government a lot quicker, helping avoid the risk of the UK defaulting on their national debt interest rate repayments!

  59. Many a slip twixt cup and lip.

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