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Industry support for RDR has fallen

Support for the RDR has fallen by more than 10 per cent over two years, according to a Financial Services Practitioner Panel industry survey.

The survey shows only 47 per cent of authorised firms say they welcome the initiative, down from 60 per cent two years ago.

Just four in 10 financial advisers support the RDR, slightly less than the average. Only 26 per cent of advisers feel the RDR changes to remuneration would benefit consumers.

In 2008, 59 per cent of retail firms welcomed the review and that fell to 44 per cent last year. Three quarters of wholesale firms continue to say the initiative is welcome.

A large majority of FSA-regulated executives say that stronger regulation was good for the industry, but six in 10 believe supervision of their own business was too intrusive.

Nearly seven in 10 say compliance costs have increased and six in 10 say they had become excessive, with retail and small businesses particularly likely to feel the regulatory pressure has gone too far.

Quoted in this morning’s Financial Times FSPP chairman Iain Cornish says: “There is a dichotomy between smaller firms and larger firms. Smaller firms see rising charges and feel victims of the financial crisis. At larger firms you see greater levels of support.”

Fewer than a fifth of respondents say the regulator handled the financial crisis effectively with just three in 10 believing the coalition’s plans to break up the FSA will solve the problems.

Cornish said: “A lot of what the regulator has been doing, you are not going to be able to judge the effectiveness for two or three years.”

The survey is based on responses from 4,256 regulated firms.

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. “A large majority of FSA-regulated executives say that stronger regulation was good for the industry, but six in 10 believe supervision of their own business was too intrusive.”

    Do it to Julia! Do it to Julia!

  2. All of which is a somewhat roundabout way of saying that small IFA’s consider themselves to be the victims of a sustained and deliberate campaign of regulatory persecution designed specifically to drive them out of business by way of a combination of excessive red tape and financial brickbats.

    For its part, the FSA remains resolutely unwilling to acknowledge these concerns, much less to engage in any sort of open or constructive dialogue to resolve them. So what’s changed? Certainly nothing for the better. If anything, things just seem to be getting worse and we’re powerless to do anything about it.

  3. Whilst the FSA are too heavy handed too many IFA’s have delivered low quality advice driven by the desire to sell products rather than charge fees and retainers. The RDR sadly does not address the sharp practice of Private Client Banks and other so called exclusive HNW firms. I became an IFA 13 years ago and fees were the right way to go then as were qualifications – it’s been coming for a long time, it’s a pity it coincided with a recession and at a time the FSA took a beating over banks. In 2013 what is left standing will be good businesses who changed direction before they were made to.

  4. It’s remarkable that so many turkeys appear to be voting in favour of Christmas.

    This is no longer an argument about fees or qualifications. It is about the ability of us as business owners to make commercial decisions about the services we wish to offer and how we wish to be paid for them.

    You might survive the RDR but will you survive RDR2 and all the other initiatives that will follow it.

    (BTW I’m qualified and charge fees anyway – I still think this is a really very bad idea)

  5. “The survey is based on responses from 4,256 regulated firms.” – We weren’t asked!

    Too intrusive – we had our TCF ‘phone interview. Prior notice of some of the questions would have been helpful – or was the FSA trying to catch us out? We were picked up on not having a written recruitment policy. Our firm is small and has recruited 3 new people in 9 years, all of whom were well known to the firm. What does that have to do with treating customers fairly?

  6. I guess a number of IFAs would like to meet Julian Stevens and put him right on a few things! Meanwhile, it is strange that as many as 40% of IFAs support RDR as effectively they are behaving like Turkeys looking forward to Christmas”

  7. My views have been constant since the first RDR discussion paper.

    The only change is that originally my concerns were that the RDR had a capacity to deliver a cataclysmic outcome for the consumer at a cost that bore no relevance to the perceived objective. Now as close scrutiny of the regulatory naivety that is so FSA, the pendulum is moving ever closer to a certainty of disaster. The implications for our industry and the demographics’ of personal finance are counter intuitive. When eventually the consumer understands the implications through sensationalised media coverage in late 2012 it is likely to translate into a 40% drop in consumer activity as fear of cost becomes the justification for not addressing personal financial issues.

    The FSA sees commission at a far to simplistic level. Commission is a legacy of direct sales. Modern financial advice is “point of entry intensive” and shoulders the regulatory costs, together with market research, knowledge administration and operational overhead. The cost reality is often far greater that the clients perception or willingness to pay.

    The current role of commission is to act as a line of credit for the consumer to access advice and the firm provide a service that is initially cost intensive. By effectively removing this line of credit leads to a blatantly obvious consumer outcome.

    Personally I feel commission should be called a different name, say ASC ( Advice and Service Charge). This is more relevant to today’s market place. All my research leads to conclude that for the vast majority of consumers where a product is being purchased, this method of paying for the advice and regulatory process is the preferred option.

  8. Michael Wainwright 7th February 2011 at 12:02 pm

    NORM d’PLUME should have asked a Compliance Consultant, who would have told him what questions the FSA were going to ask him in his TCF interview AND provided him with a short recruitment procedure. Simple, no long term commitment, and would have ensured that the FSA are happy with his firm.

    On the main subject, what percentage of IFAs support the RDR in essence but not in the total content?

  9. @ Michael Wainwright

    Do you not feel that the existence of compliance consultants is a reflection of the total failure of regulation itself?

    The fact that the regulations are now so complex that business owners cannot even begin to interpret them without a company to translate and advise is yet another symptom of regulation out of control.

    We employ compliance consultants but they shouldn’t be necessary. They are just an additional cost to the consumer on top of the £400m the FSA already sucks out of peoples savings and investments.

  10. @ Michael Wainwright

    Except the compliance consultant would say he wasn’t really sure what *had* to be done, but that he would probably recommend that such and such was done but we don’t really know until the FSA look at it but don’t take my word for it as nothing is certain you know and by the way can I have my fee please for not telling you anything at all ta thank you very much.

  11. And at the end of the day advisers are responsible for everything so if the compliance guy gets it wrong he still gets his fee.
    No wonder compliance firms love the fsa/rdr

  12. What a laugh – Compliance is a NON industry dreamt up ONLY as a response to over regulation in the first place. It is a symptom of the problem. If regulation was measured and actually worked as it should, the so called compliance industry would not need to exist. It has become BIGGER than the industry it teaches to comply – that cannot be right – it is a very sad state of affairs and speaks volumes !!!

    As far as RDR is concerned, a ‘dogs breakfast’ is ALWAYS a ‘dogs breakfast’ its just at long last many more can see it for what it is

  13. I commend MM on announcing results/findings of all these various reports and surveys, but wonder if anyone is actually listening that has the ability to make any meaningful decisions.

    As regards some of the comments, I don’t really get the turkey analogy. This is a turkey with 22 months to go, those that want to roll over (can a turkey roll?.. oh I suppose Bernard M can do it… so it must be possible).. can do so, but the rest of us have 22 months to become … well something that flies… and is perhaps PC enough to know that a turkey isn’t for life its just for christmas – which has nothing to do with January 1st. HA!

    less gobble gobble more decision.

    BTW – rather like mushrooms, some turkeys are kept in the dark and fed on…well you know..(surely not the readers here!) …the more expensive type are free range and have names like Martha and get a birthday card once in a while… Costs me a fortune mind you, really should turn vegetarian!

  14. Mr Wainwright, you don’t need a written staff recruitment procedure to have a long term commitment to the industry. A large company almost certainly needs one. As I do the hiring and firing and there are so few of us, 40+years of doing it counts for a lot more than slavishly following some written procedure just to tick the boxes for a failed regulator.

    A long term commitment to the industry and TCF don’t necessarily go hand in hand either. e.g. what about the people who go into an industry with a view to setting the firm up properly and selling it on at the end of 5 years? No long term commitment, but paying great attention to customer care and satisfaction.

  15. Sorry who got asked??? the answer is that RDR is and always was a dogs dinner, yep I will go as far as saying the FSA choose what gets published and how! their own website is a clue to the crap they push out…. One word that sums it up is *ollacks!
    As for smug annonymice, squeak up get your name out in the public domain, or shut the *uck up. you talk as much crap as the regulator, Sants, Hoban, the FOS,FSCS and banks.

  16. I’m not surprised- this is being foisted on the industry without it having been thought through properly. It will add another layer of cost for consumers and lots of IFAs will go to the wall. It will be like Katyn forest all over again.

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