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Groundhog gripes

Having spent a few hours last week sitting in the “cheap seats” costing £300 listening to the FSA’s latest update on the RDR, I have now had time to ponder upon what I saw and heard.

We listened to FSA speakers telling us how hard the regulator has worked. With 20 years of regulatory debate since the Gower report trying to decide the best way to distribute financial services, the FSA thought they were trapped in a “groundhog day” as the issues arose again and again. I cannot sympathise because whose fault is it that this expensive project has dragged on for over 20 years?

Lord Turner explained that the golden opportunity for the FSA to escape groundhog day is through consumer and financial capability, TCF and financial education in schools while rebuilding consumer trust.

You have all had time to read the RDR and form your own opinion. Do you think:

  • It is a good thing that the RDR has been “trampled” on for the benefit of the banks?

  • That all distribution channels should have the same required qualification levels?

  • We need yet another professional body for standards?

  • Bank customers will understand the difference between a sales adviser and advised guided sale?

    Most IFAs’ reply to all the questions is “no”.

    We need the banks to pick themselves up from the floor and restart lending. If selling simplified financial products to those that do not need independent advice helps them balance their books, so be it. The banks have been given many opportunities by the FSA to unleash their powerful brands and dominate the distribution of financial services. They never have and I do not think in my lifetime they ever will. I am therefore not bothered about being “trampled” upon in this instance.

    Let me put the qualification requirements into context. The Investment Management Certificate is a level 3 qualification and therefore IMC holders need to push on to get further level 4 examinations, especially IFAs providing holistic whole of market advice. Do Halifax sales staff need QCA level 4 depth of knowledge to, say, choose between their only investment products – an income, growth or FTSE tracker Isa? I think not.

    With over 12 examining bodies and numerous trade bodies, do we really need a new “body”?

    There will be consumer research in the new year to see what consumers understand about the RDR. Will the sales adviser or non-adviser in the sales channel confuse? I think so. Plus, there is even more RDR consultation to come. Perhaps the FSA wants more than 20 years of groundhog day experience?

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