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FSA concern over last minute RDR planning

David Geale FSA 200

The FSA is anxious some advisers have left developing their RDR propositions until the last minute, with not enough time to design a sustainable business model.

Speaking at an Association of British Insurers RDR conference in London this week, FSA head of investment policy David Geale (pictured) said the regulator recognises the amount of work firms have done to be RDR ready.

Geale said the FSA has seen evidence of good practice, with firms testing different RDR propositions with their clients and carrying out client segmentation where appropriate.

But he said: “Clearly, there is more work to do in this area and some firms frankly have not devoted the necessary time and energy early on to decide on a proposition that is sustainable over the long-term and that ultimately will give them a profitable model enabling them to stay in business. Clearly, with such little time left, this is a concern for us as well as for those firms and providers.”

Separately, Geale sought to clarify that firms will not be able to passport in to the UK in order to sidestep the RDR.

He said the terms under which advisers can offer services to UK customers from another European country state the firm may not conduct business if it is doing so purely to evade rules in their host member state.


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There are 28 comments at the moment, we would love to hear your opinion too.

  1. pot and kettle?
    Latest announcement on consultancy charging only yesterday great fwd planning FSA -as ever

  2. This is so different to when someone comes out and decides that they want to change the consultancy charging on GPPs some 5 weeks before implementation isnt it?

    And i suppose its so different to the good old debacle of people planning for residential property into SIPPs back in 2006. Again the rules were changed at the last minute.

    Dont criticise IFAs for doing exactly what the FSA and HMRC do on a regular basis!!

    I personally am ready, however, I must confess that I left some things till quite late purely because the powers that be do have a tendancy to change the goal posts at the last minute. You know it and I know it!!!

    Then again, as with everything, there is always a “do as I say, not as I do” ethic with the FSA soon to be FCA. (that brings on another subject of ‘pheonixing’ a company. If we tried to change from one organization to another the FSA would ask all sorts of questions!!).

  3. No concern then that the Govt is carrying out a ‘last minute’ revew of Consultancy Charging. Possibly we are all awaiting the FSA/Govt to dictate to us what we can charge then we can go forward into the abyss!

  4. From someone who hasn’t been in business and works for an organisation with a bottomless,unaccountable pit of money,I find his comments hard to take.

  5. So, firms “may not conduct business if it is doing so purely to evade rules in their host member state”. What if that is one reason, with the other being “to improve their presence in Europe” or to “add extra interest to the annual family holiday”.

    Seems that this is an odd thing to say. How will they enforce this if they need to prove that RDR avoidance was the sole driver?

    Many firms have been working on their customer propositions for a long time, some since before the RDR was announced, but with so many regulatory changes coming at a time of a difficult economic environment, I can see how some may have struggled to apply sufficient resource to this; even if it should have formed an essential part of their busines planning.

  6. The FSA should be worried as they have screwed up the financial services in the UK and have no idea how to carry on. All we seem to get is more c..p coming from Canary Wharf. RDR should be scrapped and the new regulator look at things in depth together with the experts in the field not those un qualified lot as it is now

  7. I’m rather concerned about the FSA’s last minute RDR planning.

    VAT, Consultancy charging, trail commission…etc.

    Also have any other fee based advisers struggled to complete a GABRIEL return? It’s still very much designed to record product sales. If I charge a fee for a financial review which includes advice on mortgages, pensions and investments exactly which column do I record it in?

    The FSA should have been 100% ready a year ago to allow firms to construct proper business plans.

    It’s no use constructing this omnishambles and then winging that small firms aren’t ready.

  8. I’m starting to wonder if this whole RDR experiment is getting the FSA a bit worried !!

    They must be starting to realise it will fall flat on its face come early 2013,

    The whole awareness campaign has hardly set the scene ? I have yet to have one client question this or anybody else for that matter even when I explain what RDR is I am met with blank faces

  9. So now you are seeing RDR stage two.

    The FSA knows that it will be a disaster but it won’t be their fault. It will be the fault of small firms who didn’t get their act together in time.

    The fact that they are still massaging, agreeing and changing the rules will be forgotten because, as we all know, the FSA never makes mistakes.

    A bit like the Stasi

  10. Nicholas Pleasure 28th November 2012 at 10:27 am

    All we can really do now is long to see the back of this petulant, irrational regulator and hope like made that the FCA might regulate in a constructive, respectful manner.

    We all know that the benefits of RDR could have been achieved without much of the pain. It’s just that the FSA likes it that way because they are drunk on power.

  11. I will just stave and have make my two staff redundant as I put together the most important thing in my life, my RDR proposition. It must be great to earn a salary each month. Try being self employed and taking time to do something that makes no income.
    Come and live in the real world Mr Geale.

  12. He who controls the past controls the future. He who controls the present controls the past.

  13. This is all very well, but as a general policy I leave everything while the last minute and then I don’t spend too long on it…

  14. FSA spokesperson said “carrying out client segmentation where appropriate”

    Ok, let’s examine what they mean.

    Segmentation of clients is nothing more than blatant discrimination on the grounds of economic criteria, if a client is no longer deemed profitable the FSA are really saying ditch them, we only want you to deal with Affluent people who can pay the exorbitant fees we will have to charge in future to support the regulators excessive and uncontrolled expenditure.

    That is what they really mean, IFAs are now being encouraged to discriminate against clients on the grounds of economic criteria.

    Anyone think that stinks.

  15. Having stress tested different RDR models with my clients the response of 80% of them is “why does there need to be any change” and “do we really need this FSA lot – do they do any good for us”

    Can only sit back and marvel at the simplicity and wisdom of my clients

  16. December next week and I wonder who is really ready, business, advisers and regulators?
    Maybe we can all change our name and carry on as if nothing has happened, sadly only if you are the FSA.

  17. RegulatorSaurusRex 28th November 2012 at 11:29 am

    I’m extinct, so is the RDR and it hasn’t even happened yet.

  18. I’ve just received a communication from Aviva this morning telling me how trail commission is going to work going forward. When someone at the FSA actually wakes up to the reality of RDR they’ll see what a mess it is and why small businesses are still unsure about certain aspects of it with only 5 weeks to go. As for segmentation of clients we were hyping that up when I was at the Prudential pre 93.
    Talk about teaching your granny to suck eggs. These people are not for real….

  19. Hello Playmates!

    The FSA is up to their necks in it
    Up to their necks in it
    The FSA’s been pissing up the wall
    There they go, silly sods
    They didn’t know what to do or say
    But still they went and ballsed it up
    And now they’ve gone away.


    Love and kisses

    Larry xxx

  20. David Geale is probably correct – in general terms. However as indicated in these posts IFAs may have other priorities just now. Whilst I agree my own business should have a clearer idea of how we should work under the new regime, The 1st of January 2013 is the start of a new business environment. Not the end of the process. We will continue to provide an added value service for which I know people will pay. Provided the clients are satisfied and being treat fairly, everything else is subordinate to that requirement.

  21. The FSA are I opine gamblers. Whilst higher educational standards are essential (not just for investment advisers but arguably for general insrance brokers as well!), abolition of commission is not. The vast majority of consumers cannot or will not pay fees. Perhaps they are just beginning to realise this. Still there are still the Banks!!

  22. Re this article’s heading – one thought.

    Theirs or Ours?

  23. How can IFA’s be ready when the regulator cannot understand or explain the rules…..VAT…CC…and the list goes on!

  24. I wasn’t aware that the FSA had stress-tested RDR. Sadly, this has become a complete shambles, when it could have all been so much easier with agreeing remuneration for service, polarisation restored, qualifications and level playing field for product commissions.

    As I’m prepared… Could I have a copy of the FCA logo for my new stationery?…. Thought not.

  25. I would suggest that one’s time and energy is currently better spent ensuring that client’s needs can be met, whilst a wider range of payment/remuneration choices can be utilised, rather than focusing one’s time in preparing for the new world. After all, we carry a lot of overhead in our industry remember!

    There will be plenty of time in January, I am sure, to spend in trying to translate the new structure to what will be a largely unwilling and unreceptive audience.

    It is a question of prioritising one’s time and resources in the best way and not generating any income is not a good utilisation of such endeavour (unless of course, you are in a not-for-profit role and have the luxury of a salary come what may!).

  26. @Dominic Thomas

    Yes good point – here we are effectively only a couple of weeks to go due to Xmas Holidays effectively closing everything down by 2nd week or so in December and we’re all still waiting to find out what the new regulatory statements should be, so we can order new business cards & stationery.

    What is going on at Canary Wharf?!!!

  27. FSA concern over their own last minute RDR planning

  28. Ah the sweet smell of indignation in the morning (sic)

    The RDR will not be scrapped
    Many older end advisers will leave the industry, better to retire and get out before the manure hits the fan in 2013

    A Few graduates may consider coming in to financial services and once they find their earnings sequestered each month by the FSCS levies will leave.

    Consumers will start to take charge of their own financial planning and the majority of them will screw it up.

    Direct providers and tied agents will once again be involved in mis selling scandals in the next few years

    And of course this whole disaster will be placed at the feet of IFAs who will have to foot the bill or go out of business.

    If I was an alien landing in this country from a far off planet, it would be no mean feat to conclude that the whole industry’s regulatory bodies and associates are populated by evil satanic demons, possessed of an inability to comprehend the consequences (intended or unintended) of their draconian, ill considered, poorly researched and lamentably incompetent implementation of changes that initially were supposed to be for the benefit of consumers, but will eventually alienate the majority of ordinary working families from ever seeking qualified, professional, ethical financial planning assistance.

    Well done FSA, FOS, FSCS, if all the money spent on funding these organisations was actually paid into a central fund administered by sensible people, compensating genuine claimants would be a doddle and cost far less. These organisations will soon realise that by screwing over the FSA sector, they will eventually end up putting themselves out of job (hopefully) as no one will be around to pay for their excessive fees.

    How can an organisation like the FSA be so damn stupid, you do not bite the hand that feeds you, you nurture it, make it better, help it maintain profitability for sustainable long term consumer benefits, not try to kill it off in favour of banks providing “vanilla” products.

    The loonies are definitely in charge of the asylum.

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