View more on these topics

Hoban sticks to his guns as MPs continue RDR onslaught

Large numbers of MPs used last night’s Parliamentary RDR debate to express grave concerns about the review and urge the FSA to think again in areas such as grandfathering of existing advisers.

Up to 80 MPs attended the backbench business debate last night in Parliament with the vast majority expressing huge worries about the damage likely to be caused by the RDR.

Conservative MP Harriett Baldwin called the qualification requirements in the RDR “illogical” and called for the Government to work with the FSA to deal with the “cliff-edge” advisers currently face.

She said: “We all want better quality advisers, no doubt about it but to close the door on practising your profession on the January 1, 2013 is really not on.”

Conservative MP and Treasury Select Committee member Mark Garnier said: “Lord Turner, the chairman of the FSA, suggested that reducing the number of IFAs might well reduce the overall cost of investor advice. How can reducing competition possibly result in improved service to consumers? I can see no reason at all for not introducing grandfathering rights. Indeed, when the FSA was set up it introduced grandfathering rights when IFAs came over from the personal finance authority.”

Responding to the debate, Treasury financial secretary Mark Hoban praised the work of IFAs, including his own, and said he recognised the strength of the debate on grandfathering.

He said: “It is an important debate to have, but we need to think about how much experience is sufficient for people to be grandfathers, and about how we can ensure that that experience covers the range of products necessary to provide whole-of-market, independent advice.

“We ask people to advise on a range of products, such as pensions, insurance bonds and ISAs, and they need such technical knowledge to do so. Consumers are entitled to know that their adviser has a high standard of technical knowledge, and a minimum qualification standard should deliver that.”

He added: “I cannot overstate the detriment to consumers from poor and biased advice. Indeed, the FSA estimates the detriment to consumers from inappropriate advice to be £200 million per annum, and it thinks that the figure could be significantly higher. Consumer detriment has led organisations such as Which? and the consumer panel that advises the FSA to support the measures in the retail distribution review. We need to get that balance right and to address some of the issues that undermine consumer trust in the IFA sector, and the FSA has sought to do so through the RDR.”

TSC chairman Andrew Tyrie accused the FSA of inflexibility and loss of perspective.

He said: “There is one crucial point we just must get across to the FSA, which is that the increase in the compliance burden is going to be paid for by the consumers. It is the loss of perspective from the FSA, the inflexibility of approach they seem to be taking in implementing this which is reflected in the very large number of people in the house.”

TSC member and Labour MP George Mudie said the FSA continuing with the RDR will result in a reduction in consumer choice.

He said: “There seems to be a lack of interest in the diminution of choice they are going to present if this is forced through by them on consumers of all ages.”

An associate of the CII for 25 years, Conservative MP Heather Wheeler said there was not enough evidence to support the need for the huge change the FSA was imposing through the RDR.

She said: “If I felt they were doing this because there had been bucket loads of horrendous examples of misselling, or clients had been ripped off or there were statistics showing the IFAs had been responsible for the majority of the complaints in the industry, maybe I could understand their views. But none of this is true.”

Conservative MP Nicholas Soames attacked the FSA for not listening to the industry.

He said: “They haven’t listened to the industry or the professionals in the industry, which will seriously damage the interests of the consumer very profoundly and it is the consumer the FSA seeks to protect.”

DUP MP Jim Shannon said the RDR would mean poor people would not be able to afford to get advice in future. He said: “It is not just a matter of advisers providing help for the wealthy, people who can stay at home and watch their money work and grow for them, the people I am speaking on behalf of tonight are those who have a small total disposable income and wish to enhance their small pensions  and seek help from financial advisers.”


News and expert analysis straight to your inbox

Sign up


There are 22 comments at the moment, we would love to hear your opinion too.

  1. I have written to Mr Hoban today and suggest that all IFA’s do the same and copy in their local MP.

    The only way to alter the thoughts of these idiots is to bombard them with letters detailing the errors of the FSA’s ways

  2. I am pleased to read the above statements from last night. However, there is no mention of how the consumers have been ripped off by the banks due to poor advise. Did they not have the guts?

  3. Mark Hoban is entrenched in his position and would no doubt like a get out clause to pop up. As one of the central planks of the RDR is that it will remove commission bias perhaps the FSA could produce the independent evidence of commission bias and give it to Mr Hoban. If it cannot do so the reason for abolishing commission on investment products falls and Mr Hoban should recognise this. Further can Mr Hoban ask the FSA why is it when the FSA state that 92% of consumers currently elect not to pay a fee for investment advice when they have been given the choice to do so, that the FSA feel consumers will be better served by 100% of them paying a fee. If he cannot get satisfactory answers then he can ask the FSA to rethink.

  4. Hoban hears but plainly doesn’t listen any more than the body for which he’s quite obviously its parliamentary stool pigeon. Given that the proportion of all complaints attributable to the IFA sector which are referred to the FOS has been steadily diminishing for the past five years, any issues over less than perfect advice are already being addressed. The statistics show that. But is Hoban prepared to recognise this? No. As far as he’s concerned, the RDR will go ahead as planned. Never mind the loss of a fifth or more of the current IFA population. Never mind reduced access to independent financial advice as a result of the removal of commission. Never mind the relentlessly increasing burden of excessive regulation. Never mind that the banks account for 61% of all complaints referred to the FOS (with a 50% uphold rate, compared with only 39% of the 2% attributable to the IFA sector). Never mind what a large proportion of the industry is saying about the RDR and the FSA. Hoban clearly isn’t any more interested in what anyone else has to say than the FSA.

    Did he respond on the issue of denial of the protection of the 15 year longstop? Not that I heard. Did he respond on the vastly increased estimate of the costs of implementing the RDR? Not that I noticed. Has Hector Sants provided any clear material detailing just what the benefits of the RDR are going to be relative to its huge cost and the collateral damage likely to be caused? On that one, we’ll have to wait and see.

    But it remains fairly clear that the FSA intends to stick resolutely by its standard modus operandi of announcing its agenda and to hell with what anyone else may think. Get with our programme or go jump off a cliff. What a great regulator.

  5. Talk about a sledgehammer to crack a nut – the RDR is almost irrelevant to the delivery of measured, solid, experienced advice. I am 60 with 43 years experience. These exams are a worry and massive distraction from my day to day activity of helping my valued clients. Yes advice is becoming elitist but question why, the costs of Compliance have rocketed and must be borne by the consumer. ‘Stakeholder pensions’ tried to control charges but just meant that many advisers could not afford to spend time discussing it. Do the government really want the Banks to take a greater market share with their track record? Perhaps if financial advisers had a stronger lobby group and solid representation this RDR nonsense would not have been propogated.

  6. I think you are wasting your time writing to Mr Hoban as I have done so several times. The response is the same and my own MP has given up as a result.

    Personally I think Mr Hoban believe AIFA represents all IFA’s and as such has used them as one of the reasons why RDR is going ahead after a 4 year consultation including AIFA.

    I just wish we could make someone listen but they all seem to have their own objectives which has nothing to do with helping the consumer or making many find new less experienced (with lots of exams) advisors post 2012.

    To have an organisation (the FSA) that is unanswerable to Parliament is just incredible and in my view is unlawful and undemocratic.

    RDR is a minor issue compared to that but it goes on and on and the FSA get larger and larger (4,000 staff now) compared to only 29,000 IFA’s.

  7. When the Minister uses as evidence “estimates” from the FSA of £200 million per annum misselling (without any evidence to support this figure or any breakdown between IFAs and other advisers) you have to question his (and the FSA’s judgement) He also quoted 89% of IFAS who undertook CPD and confused this with the number who had already reached level 4. Perhaps we should all insist on Ministers and senior FSA officials influencing major industry decisions to at least justify the facts on which their opinions are based through assessed CPD. Perhaps on the job retraining leading to at least level 4 should also be mandatory. Hansard should make interesting reading when these chickens come home to roost in years to come.

  8. For The Attention of Mr Mark Hoban

    Even though you are younger than me I notice you have a degree in Economics and you are a chartered accountant.

    My challenge to you is that you requalify as a chartered accountant so that you can continue your position as Financial Secretary to the Secretary within the same time period I have to in order to meet RDR standars.

    I await your reply.

  9. For The Attention of Mr Mark Hoban

    Even though you are younger (10 years) than me I notice you have a degree in Economics and you are a chartered accountant.

    My challenge is that you requalify as a chartered accountant so that you can continue your position as Financial Secretary to the Treasury within the same time period that I have to requalify in order to meet RDR standards.

    I await your reply.

  10. The trouble is that Mark Hoban is out of his depth and doesn’t know what to do. The FSA is leaning on him but something is nagging inside him saying – this doesn’t sound right, what the IFAs say makes sense.
    You could see it on his face and in his body language llast night.

  11. I am just lost for words. I cannot believe that the FSA has been allowed to blow £1.7 billion on something that isnt broken. – Without any discussion in Parliment.

    I have not heard one complaint from any consumer relating to commission remuneration or lack of IFA qualifications.

    Mark Hoban refused to listen to the 30 or so MPs and declined to apologise for his McDonald comment. The guy must hate IFA’s or is in league with the Banks – I cannot think of any other reason he is insisting on steam rolling this through.

    The banks are flogging structured products to any one who walks in – regardless of suitability or need. Complaints dont hurt the big boys and they dont seem to be being punished.

    If an IFA acted like this he would not still be business as we grow by being referred on by happy satisfied clients.

    We need an IFA protest to bring this to the public attention. We need to get together and fight this. So far we have been too nice.

    I thought that the RDR was so stupid – it would never get this far!!

    IFA Protest anyone?

  12. All RDR will do is increase the number of people being SOLD Products from the Banks and IFA’s limited to selling advice NOT products.
    The commercial reality is that even qualified IFA’s may not be able to generate enough fee’s to stay in business due to only having a mainly low to middle income client base.

  13. The FSA is not above the law or Parliament!

    When King Charles 1 was placed on trial for waging war on his own people in 1649, he claimed the King, was above the law and his right to rule was God given.

    The Parliament condemned him to death on 30th January 1649. No man, woman or institution is above the law!

    Last night we witnessed Parliament starting to reassert itself over the might of the FSA. This was a good day for democracy but the Leviathan is not yet dead.

  14. I thought MPs from all parties were excellent last night and they could clearly see the concerns of IFAs and responded accordingly. Unfortunately Hoban again wouldn’t let anyone interupt him in case he was put on the spot and had to answer questions which he probably wouldn’t be able to answer. He read from his FSA prepared notes and clearly showed that he hadn’t listened! It is a waste of time writing to him as he has a prepared standard letter that is sent in reply from his office.

  15. The disguise took me a while to see through, but then suddenly the clouds fell from my eyes.

    The mealy mouthed chap trying to justify the unjustifiable, in a chamber packed with intelligent and motivated politicians, was Nic Cicutti.

  16. I think the debate last night was quite comforting in that many MPs feel the same as we do.

    However, the greatest point in the debate was not necessarily about the RDR but the number of MPs that appear to be against the amount of power that has been vested to the FSA without proper scrutiny. Perhaps if what they were doing, how they were going about it and the actual gains from all the time they have reigned was scrutinised more, we would not be in this position.

  17. The FSA is run by people who are out of touch, with immense power, their staff is forever increasing to the point of there being one for for one with advisers if they carry on increasing and reducing the number of advisers.

    They are overpaid and out of touch with a mandate which is idealistic and elitist and this is very dangertous.

    They cannot be elected or deselected and yet they are able to affect the lives of millions of people.

    I have been giving financial advice for over 30 years, I have the majority of my clients still with me, some have died and their families have benefited from the advice given.

    Testimony to giving good advice is the clients being with you, staying with you, also that they recommend their frinde to the same advice source and the younger generation of the family also becoming clients as they grow.

    I am of course the oldest and most experienced adviser in our partnership by 20 years and yes Iam the least qualified.

    The FSA should get real and get out there and earn an honest living instead of living off our backs and then bring in rules to justify it.

    I have nothing against progress and I have always been professional in my advice process and advice given. Trying to reinvent the wheel is silly and even more danferous is that the FSA seem determined to throw the experienced baby out with the bath water.

    They have started to walk down a road and will be diverted, nor will they change of their own valition, they do not listen. They have possibly too much to lose not withstanding the large amount of money in wages and pension perks they receive.

    The Government needs to act and I hope it does act in the name of common sense and for the people who are looked after by the OLDER AND LEAST QUALIFIED OF ADVISERS WHO ARE STILL OUT THERE LOOKING AFTER PEOPLE FOR THE RIGHT REASONS NOT JUST THEIR OWN INCOME.

  18. I actually became quite optimistic for a while watching the debate – some very impressive MPs with a clear grasp of the facts making excellent points. Surely Mr Hoban must be taking some of it on board? Uh no. He was clearly very bored and just wanted to read his prepared statement before sprinting for a taxi. He would have fitted in very well working for Gordon Brown. Personally I think Britain is in very big trouble and has no hope of escape with people such as Mr Hoban in positions of authority. I wouldn’t employ him to cut the grass. Just accept that we all need to pass the boring exams, dump most of our clients and press on. The only option is retirement.

  19. Hoban does listen 2nd December 2010 at 12:38 pm

    Hoban does listen but only to his RDR implementation committee made up of a string of bankers, advisers to bankers and former FSA officials.

  20. Whats the point of ‘sticking to your Guns’ if all you can do is ‘FIRE BLANKS’

  21. Anyone else wondering if Chris Cumming saw what was coming, decided that opposition was futile and caught the first bus out of town?

  22. Industry Insider 7th December 2010 at 1:52 pm

    As per usual, the IFA community (of which I am part) is missing the point completely.

    It’s not about IFAs. It’s about the consumer and trying to re-establish some semblance of trust and faith in our Industry.

    Allowing grandfathering will achieve nothing but appease IFAs and further sink the reputation of financial services advice. For those IFAs backing the Grandfathering bandwagon please consider the long term health of the industry and not just your short term discomfort in achieving the required level four qualifications which we were notified about back in June 2009.

    The fact that Financial Advisers (across all distribution channels) have been able to invest the public’s money with qualifications akin to a school GCSE does not mean we should continue to do so indefinitely. Significant change in any industry is hard but we should not allow this to distract from achieving what is needed – a fundamental shift in public perception of financial advice to ensure the industry’s longevity for those at the start or mid-point of their careers.

    If the argument for grandfathering is based on an idea that experienced advisers already have that level of knowledge then why not prove it to your clients by taking the exams, getting the certificate and using it as a positive tool for marketing purposes?

    If we improve the perception of our industry, more people will see the value in receiving professional advice which will facilitate a behavioural change, giving confidence to the public to seek said advice which will ultimately reap huge benefits for all advisers who choose to include themselves in financial services post RDR.

    It would be nice to see the IFA network heads, provider spokespersons to voice publically, what most will tell you behind closed doors, that RDR and the qualification requirements are essential to ensuring the long term viability of the Industry. The cold hard truth of the matter is that across all industries, successful businesses are having to work harder to retain their existing customer base and acquire new business and this is achieved by investing in new technology and investing in the skill set of their workforce; financial services is no different and this is why we need to fully embrace RDR and the changes it brings.

    Remember… the dinosaurs died out.

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