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Industry raises concerns over RDR unintended consequences

Advisers and providers have warned that unintended consequences of the RDR could undermine the whole project.

At a Perspective Financial Group RDR roundtable, Financial Connection managing director and chartered financial planner Jackie Lee-Lis said the inability to advise lower-income clients was the biggest concern with the RDR.

Lee-Lis said: “There is a sector of our client base that in future we will not be able to service. Some of those I helped 20 years ago are some of my best clients today. Even if 10 years down the road those clients never get wealthy, they remember you and keep recommending you. I am very scared of losing all of that.”

Vanguard head of sales Neil Cowell said the biggest concern is providers trying to get round the new distribution rules.

He said: “I worry particularly with restricted advice that perhaps ways will emerge of encouraging distribution flows. This certainly will not be within the spirit of the RDR but it may technically be within the letter of it.”

Nucleus IFA account director Darren Lowry said: “The big fear is ongoing regulatory pressure on IFAs, which stops them getting on with their job. IFAs in general are resilient but the regulatory burden will be a challenge.”

However, Aifa policy director Chris Hannant said he hoped the RDR would achieve at least one of its stated aims.

Hannant said: “ My fear is that, in the extreme, we go through all this aggro and it damages the client relationships, undermines the sector, and the disruption caused negatively impacts the future of advice.”

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  1. The whisper on the wind is that the FSA has finally woken up to the strong possibility that by forcing through so many major changes all at the same time and to a single deadline, much of the industry, despite its best efforts, simply won’t be ready by 3rd Jan next year and that chaos will ensue.

    The requirements of the RDR encompass so many facets, so many of them unforeseen by its maniacally zealous architects at Canary Wharf that, as one obstacle gives rise to another, everybody’s having to play catch-up. It’s a bit like a basket loaded with more grapefruit than it’s capable of accommodating and from which, as a result, the bottom has torn open, sending its contents bouncing in all directions. People are running hither and thither trying to pick them all up, but there are simply too many.

    Privately, the FSA realises that it’s responsible for this state of affairs and people are asking why it couldn’t have introduced the various elements of its RDR on a staged basis instead of dictating a single Red Button day for everything all at once.

    But the FSA will never admit publicly to having got anything wrong, least its criminally understated estimate of what it’s going to cost the industry to implement all these changes. 31st December 2012 is the deadline for compliance and by God that’s what it’s going to be for EVERYTHING, shit or bust, regardless of what anyone else may have to say on the matter.

    About the only thing on which it’s given any ground is the issue of qualifications, for which many of us are profoundly grateful.

    If we thought 2012 has been challenging, 2013 may well be even worse.

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