View more on these topics

Garnier plea fails to bring out pro-RDR IFAs

Treasury select committee member Mark Garnier says he has not seen an increase in correspondence from pro-RDR IFAs following his call for supporters to come forward.

Conservative MP Garnier made the call at an event in London last month but says the majority of letters he receives are still critical of the RDR.

He says: “There has not been a sudden tidal wave of people saying ’thanks for the invitation, we agree with the RDR’. Perhaps there have been three or four out of 20 or 30 letters in the last month.”

Garnier made the call to challenge an assertion by Aifa director general Stephen Gay at the all-party Parliamentary group on insurance and financial services in December that protests over the RDR are coming from a vocal minority. Garnier says: “The challenge to Aifa and the rest of the pro-RDR industry seems not to have been met.”

Garnier also raises questions about the data in the cost-benefit analysis sent by FSA chief executive Hector Sants to select committee chairman Andrew Tyrie last month.

It cites an annual consumer detriment cost from previous misselling reviews of £223m and estimates the actual cost due to misselling is between £400m and £600m.

Garnier says: “I get very uncomfortable when the FSA starts spouting out estimates like these. The trouble is you just do not know if they are going to be accurate. Until you can quantify it properly, the numbers are just meaningless.”

He adds that the FSA should have included cost estimates for detriment to consumers caused by advisers leaving the industry alongside its estimated £1.7bn implementation cost.

He says: “If the FSA is going to try to extrapolate for misselling costs, then it is reasonable to try to work out the detriment caused to levels of saving and protection by the RDR due to advisers leaving the industry.”


News and expert analysis straight to your inbox

Sign up


There are 24 comments at the moment, we would love to hear your opinion too.

  1. err…perhaps there aren’t any?

  2. Garnier for prime minister.

  3. IFA’s who are already at the RDR level no doubt use their qualifications and transparent charges as one of their key selling points.

    I cannot understand why they would want that distinction diluted by all IFA’s reaching the same level. Their silence shows that they appear to agree.

  4. I think this says it all really! Even potential Advisers who think in the 1st place it might get rid of their immediate ‘competition’ can’t fail to see that it is the thin edge of the wedge!

    Unless they want a life of constant studying (with no family life) – Increasing Fees (due to less IFA’S) & REDUCING INCOME (fees will invariably be pushed down) along with the feeling of looking over there shoulder like a hunted dog – then even the most ardent semi-supporter will probably wither on the vine! Any PRO RDR IFA MUST BE A MASOCHIST!

  5. It is about time the FSA realised that majority of IFA’s know that the RDR is bad for consumers. It enploys people with no idea how the financial sector operates to implement rules and reglations they dont understand. Mark Garnier probably by now realises that AIFA does not represent the IFA communiy anymore so he should insist on the FSA listening to the majority and scrap this RDR rubbish as only a handful of IFA’s actually believe in it

  6. Fraser Brydon - IFA 14th January 2011 at 9:25 am

    The vast majority of IFAs welcome RDR, I do, therefore you are not going to witness an increase in correspondence, it’s the implementation of it which is causing concern. Most “pundits” tell us it’s a done deal so why should we waste our time extolling the virtues of it if there is little hope of influencing the constituents.

    Just make it a level playing field and we’ll all be happy!

  7. I haven’t come across any of the “vast majority” who welcome the RDR.

  8. Perhaps it is because the pro RDR IFA’s have better things to do than moan and groan and winge about how unfair life is, and actually get on with advising clients and getting on with doing their jobs.

    I can’t wait for 2013….

  9. Having just completed the Level 4 Diploma, I am pleased to say that I have not spouted out to clients how clever I am and bragged that loads of IFAs don’t have this.

    I did the Level 4 because it looks like I have to, does it make me a better adviser, well no it doesn’t, have any clients asked me if I have it, well no they haven’t.

    As usual, the people to gain here are not consumers, not advisers but the big old life offices… “what we might not have to front load commission payments and then free up cash for us”.

    As for all those pro RDR boys, well I find it sad to think that they create a divide in the profession by saying everybody else is wrong and they are right. |If you have qualifaications and you want to brag about them, then splash over your website and on your business card and clients can decide, who cares that I got a university degree in 1995

  10. It is like TV programmes you will get the occasional idiot complaining that they did not like it (well turn over then, or in this case go to back to being a double glazing salesman or second hand car dealer) but the tens of thousands who did like it don’t bother writing in to tell the producers their thoughts, similar sort of ambivalence here I’d imagine in that all those in agreement know it is going ahead so why bother writing in. It will increase advisers level/depth of knowledge so can only be a good thing for the consumer on the whole.

  11. In some way there are parallels to be drawn here. My confidence and respect for MPs had been seriously dented following the expenses issue and general frustration at their value, influenced in the main by media and generalisation.

    There is no substitute for personal experience when you can sense not just knowledge but passion, enthusiasm, integrity and professionalism.

    I have no idea what qualifications Mark Garnier has, I assume ,what ever is required would be a pre requisite to exist and operate in the environment , however his actions and even handed approach ( Integrity) have caused me to both appreciate and value the role of an MP.

    The general public who have first hand experience of the services of an IFA firm are in the “Majority” pleased with the overall experience if my own firms post advice questionnaires are representative.

    I believe every IFA is happy to progressively improve professional standards and deliver the best outcomes for consumers, this is a business fundamental. My problem with the RDR is it is a very dangerous experiment, with the potential for a cataclysmic outcome for both the industry and the consumer and costs that exceed any benefit.

    As both a business man and IFA, give me something to believe in and watch the wave of entreprenerial enthusism that follows. This is what the country needs right now.

  12. A better qualified adviser must, potentially, be good for the consumer – albeit, most lesser qualified advisers may never have caused any consumer detriment.

    However, it surely must be wrong that advisers who have been at Diploma level and beyond for many years (when the exams were more difficult) and have thousands of hours of CPD are still required to ‘gap fill’.

    On a final point, why would anyone remain a member of AIFA given their lack of support for the people who may have been paying memebership fees for many years?

  13. To Richard Arnold – point well made. Many people believe that ALL MPs are rogues and fraudsters who are only interested in their own back pockets. This may be true of some, maybe many, but certainly not all.

    Which? Watchdog, and the FSA seem to believe that all IFAs are commission-hungry cheats who, without a bunch of certificates from CII, are unable to provide a worthwhile service to clients.

    The truth is that IFAs have, for the past 25 years, helped millions of people steer clear of the real rogues in financial services (the banks) whilst the FSA is doing everything in its power to ensure that future generations have no choice but to talk to their friendly bank manager.

  14. The way I see it is that the whole RDR has been approached with the objective being “how do we stop IFAs earning commission”. It is therefore producing a mixture of good (supposedly raising standards) outcomes and bad (less IFAs, more customers for banks) outcomes. If they’d made the goal “let’s ensure people get best financial advice” it would have been just as radical but completely different. The first step would be to ban all non-independent advice. Yes there would need to be a longer lead=in period however, if the goal is to achieve what is best for customers, banks selling their own products should be brought to an end and it should be made compulsory that all advice is given on an independent basis. The numbers of IFAs would have to ballon – not shrink. Compared to what the current RDR will achieve, surely this is better. More radical, but better. Of course, it will never happen. The big insurance companies and banks have pushed RDR because they feel it suits their own agenda however, if a new financial services world was proposed where they couldn’t push their won products through their own salesmen, their enthusiasm would evaporate, despite this alternative being much better for consumers.

  15. I very much agree with Richard Arnold here, when he says the RDR is a dangerous experiment. That is exactly how I feel about it. As for Mr Garnier I believe he used to work in the city and has been a hedge fund manager, so he has experience as well as the most important attribute…common sense.

  16. May I nominate Mike Jordan as the CEO of the CPMA please.

  17. IIRC from watching the Panacea Forum video Mark Garnier said he used to be a compliance officer in the City for a hedge fund manager. So he has first hand experience of dealing with regulators. He compared the old regulatory system & how matters operated when the FSA took over.

    I think he refers to it as “the dead hand of regulation”.

    So it’s good that people sitting on the TSC understand exactly where IFAs are coming from in all this.

  18. One particulalry vociferous supporter of the RDR spent so much time on all the blogs that he went out of business!

    As for the claim that the ‘vast majority of IFAs welcome RDR’ I am shocked that anyone would know where the actual balance of opinion lies!!

  19. Steven Farrall (Adviser Alliance) 14th January 2011 at 12:03 pm

    The RDR is nonsense, and this proves it. I have just sat and passed RO1. I scored very very high marks on what might be termed all the stauff based on experience, knowledge and ethics. And relatively low marks on the bureaucratic cobblers. Almost certainly that will be the case with every 50+ age IFA. The RDR is simply a bureaucratic wet dream. As for ‘consumer detriemt’ – if the FSA ‘estimate’ £400m that pales into insignificance with the ‘consumer detriment’ of their own very existence and the total FSA costs of £3.5Bn taken out of the economy sinec 2001. Tossers

  20. Steven Farrall (Adviser Alliance) 14th January 2011 at 12:06 pm

    Of course IFAs welcome RDR – especially those like me who already pretty well comply. Of course they would. It creates more monopoly opportunity for them. By arbitrarily taking away the businesses of hundreds of other people its bound to. The ‘special privilidge’ conferred on pro RDR and RDR compliant IFAs by the RDR comes att he price of taking privilidge and freedom away from someone else.

    It’s an ethical scandal.

  21. Mike Jordan,

    What a radical way of thinking about RDR.

    I like this idea and can see that it would probably work better than the present proposed idea.

    The Banks/Life companies could still sell their own products, all they would need to do is show that they are the right solution for the client as we have to now.

    With their large resources surely this should be a piece of cake.

    Unfortunately a lot of their products are not good value at present.

    In the meantime I will continue to study for the exams.

  22. Steven Farrall, don’t make the regulators think you have serious issues and that you need a ‘visit’….

  23. Incompetent Regulators Awards Team 14th January 2011 at 3:23 pm

    We now all know the FSA are run by a bunch of l*ars.

  24. Has anyone asked the FSA and FOS to produce the costs of client detriment of the Banks misselling and the proportion of all misselling.

    Forgive me if I am wrong but I would guess it would be cheaper and more beneficial to the industry as a whole, if Banks were barred from selling financial products. i.e. take us back to Financial Services act.

    There would be less Regulatory cost, less misselling, less client detriment, less bag image for the financial industry.

    This would have a far greater positive impact on the industry than RDR.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm