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Garnier calls for TSC inquiry into RDR ‘hangover’

Garnier Mark 250

Conservative MP and Treasury select committee member Mark Garnier is calling for a “vital” parliamentary inquiry into the impact of the RDR. 

Garnier is requesting TSC chair Andrew Tyrie launch an RDR “hangover investigation”, after SantanderAviva and Axa scrapped their advice offerings in the wake of the RDR. A number of other institutions have either pulled out of financial advice or restricted their offering to high-net-worth clients.  

Garnier says: “We need to revisit the RDR and see if it has delivered the intended outcomes and what the unintended consequences have been. It is vital that we do it and I will make sure it is raised.

“We may need to take a proper look at it after a year but we can raise certain issues about it in other investigations. If we are having people in from the FCA, we can ask them about the RDR and whether it is working well.”

The FCA has committed to a post-implementation review at the end of 2014.

In 2010, Garnier and Conservative MP Harriett Baldwin tabled a House of Commons debate on the impact of the RDR on IFAs. Baldwin says she is keeping her “ear to the ground” and will raise the issue in parliament again if her constituents are affected.

She says: “I did not expect the banks to move out of the market but I expected more consolidation of small IFAs which appears to be happening. Most IFAs I have spoken to have sold their businesses now.”

Apfa policy director Chris Hannant says: “It is sensible for the TSC to look at it again but we will not have the full RDR story by the end of this year.”

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. Such an inquiry cannot come soon enough.

    However, the scope of the inquiry should not just be limited to the RDR’s impact on advisory services, but should also consider the FSA’s wanton mismanagement of this whole debacle.

    This is pertinent, as many of the FSA’s former chiefs and senior management have personally profited following their time at the regulator; and many others are still in place.

    Where conflicts of interests, or proven incompetence, have occurred action should be taken and undeserved knighthoods given back.

    More importantly, where power has been abused (and I can think of no better example than CF Arch cru), the FCA should take immediate action to ensure that consumer and firm interests are protected.

  2. Anthony Rafferty 9th May 2013 at 10:21 am

    I challenged a representative from the then FSA about the likely unintended consequence of banks pulling out of investment advice given their lack of business case once commission is banned. This was about a year before RDR was introduced. The response was that very few ‘mass market’ people have more to invest than a husband and wife’s worth of ISA allowance. Anyone that does should be more willing to pay for advice. It may have been a personal opinion, but I’m not so sure this is an “unintended consequence”. It’s certainly not an unexpected one on the FSA’s part.

  3. So finally (we knew it anyway) we hear the truth about the intentions of RDR. Banks reign supreme and IFAs get what they can, if anything, for years of dedication and an uncertain future.

    It doesn’t require a sledge hammer to crack a nut – and it didn’t in this case. Certain changes needed to be implemented but it is now blatantly obvious that the hidden agendas have backfired, placing thousands of decent people – bank advisers, IFAs and support staff – in totally unfair positions.

    I hope everyone concerned with the debacle is proud of themselves. The TSC had the opportunity but like all politicians, made a noise but didn’t have the courage, strength or commitment to force a change in the legislation.

    Shame on all of you.

  4. Better late than never?

  5. To the Editor of Money Marketing – please look out all previous posts around the unintended consequences of the RDR and send them to Mark Garnier so he can get proper information about the utter disgrace this thing has become.

  6. Iceberg? What Iceberg? remarked Captain FSA as he quaffed on his Champers with his chums in the City…

  7. Many years ago when I was learning to drive I was trying to steer into the driveway of our house and thought all you had to do was turn the wheel and keep going not realising that you really need to adjust your steering i.e. feedback information on what is actually happening. Inevitably the gate posts were flattened until I got the hang.
    The FCA intend to review the RDR at the end of 2014 which is probably a reasonable timescale but I do think some questions should be asked before permanent damage is done. Basic control loop theory states that there needs to be some feedback and action taken before the whole thing goes belly up.
    But the TSC have more important things to do.
    Incidentally, one thing I am doing is noting a few of the transitional issues we are having with the RDR (i.e. the sheer increase in cost to our clients) so that come 2014 I can remember what the problems were!

  8. Garnier, full of hot air and posturing again.
    He was absolutely useless at the tsc fsa hearing.
    He barely opened his mouth.
    When Chris Leslie of labour was looking for support to make FSA more accountable, Garnier would not back him.
    Garnier has achieved nothing for advisers except a tsc hearing, at which, the FSA told the TSC that an act of parliament would need to be passed for them to take any notice of Parliament.
    In effect we have a quango that is more powerfull than the government and Garnier and his ilk are impotent in the face of it.
    Vote UKIP at the next election.
    Garnier loves to pretend he is on the side of advisers, he is not. His only interest is self interest.

  9. Before Peter Smith departed Canary Wharf for sunny Dubai he was asked what would happen if the RDR didn’t work.

    His insightful response was, “If consumers still do not want to engage with it then we probably will have to do something else.”

    We already know that consumers have been dissuaded from engaging with the advice process due to the decimation of the adviser population – whether IFA, restricted or bancassurer.

    I hope Chris Hannant was quoted out of context because the review and subsequent U-turn cannot come too soon.

  10. Julian Stevens 11th May 2013 at 8:43 pm

    The FSA’s endless embellishment and bolting-on of countless additional requirements to its RDR go hand in hand with its total disregard for the requirements of the Statutory Code of Practice for Regulators. Amongst other things, the Code mandates a targeted, risk-based and proportionate approach to regulation. The RDR patently flies in the face of these statutory requirements.

    Given that one of Mark Garnier’s colleagues on the TSC is Pat McFadden who wrote the foreword to the Code, one wonders why the former isn’t quizzing the latter on his apparently total lack of interest in ensuring that the requirements of the Code aren’t being enforced and the regulator forced to pay due attention to them.

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