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FCA’s Martin Wheatley: Banks were too slow to act on RDR

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Financial Conduct Authority chief executive Martin Wheatley has revealed the regulator’s surprise at banks’ slowness to respond to the RDR.

Speaking at the FSA’s final public meeting in London today, Wheatley reflected on whether he judged the RDR to have been a success so far. 

He said the number of qualified advisers was as expected and the FCA was encouraged by the move to clean share classes.

But he added: “We expected the industry to professionalise. What we have been more surprised about is that a number of the larger institutions have been slow to do that.

“What we had with a large number of retail distributors is a slowness to revert to business models that are RDR compliant.”

Money Marketing understands the regulator has been taken aback by the extent of the withdrawal of banks from the mass advice market, and feels that banks are only developing advice models now that they should have been working on a year ago.

In March, Money Marketing revealed the number of IFAs and tied advisers operating on the first day of the RDR was 20 per cent down on December 2011 figures while the number of bank advisers fell 44 per cent. The total number of retail investment advisers fell 23 per cent from the 40,566 estimated by the FSA at the end of 2011 to 31,132 at the end of 2012, the first day of the RDR.

FSA estimates suggest there were 25,616 IFAs, tied and multi-tied advisers in December 2011, of which 21,696 were IFAs. This fell 20 per cent to an equivalent 20,453 advisers after the RDR deadline. The FSA is unable to give a split for IFAs.

The number of bank and building society advisers fell by 44 per cent from an estimated 8,658 in 2011 to 4,809 post-RDR. Since these figures were revealed, Santander, Axa and Aviva all announced they were scrapping their advice arms.

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Comments

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

  1. Jane Summerfield 18th July 2013 at 11:47 am

    This gentleman sounds terribly arrogant. Does it ever occur to him that there is no way of making £200 an hour ‘work’ other than if you are advising the top 5% of wealth holders in the UK? Does anyone at the FCA actually ever come out of their expensively furnished offices to engage with the real world?

  2. ….and when all advisers have finally had enough there will be the problem for the majority who have failed to make any plans for the future and then they can all sue the FCA for destroying the industry.
    But I expect Mr Wheatley will be long gone enjoying his bonus and large pension with all the his other cronies past and present!

  3. Another arrogant FCA employee. He does not seem to realise that the FSA/FCA have ruined the advice market for averageman/woman. As the year goes on and more and more self invest with terrible consequences in later years maybe he will look back and say I did
    it my way to hell with others

  4. Regulatory Fee Payer 18th July 2013 at 12:04 pm

    As it was the final FSA meeting perhaps he could have reflected on whether the FSA was a success. Perhaps not, but never mind, all aboard the replacement cash cow.

  5. Mr Wheatley is again demonstrating how little he and the FCA know and understands about the industry they regulate, his comments show no respect what so ever, for the people it employs by pointing the blame at all but themselves.

    They knew/know damn well the RDR is a experiment doomed to fail,

    The banks and others were NOT slow to react it, they knew only to well it was to expensive and un-workable.

    Shame on you Martin Wheatley, at least have the guts to admit the FSA,FCA and you have failed the consumer and the financial services industry/profession.

  6. I think it’s worldweariness. Most businesses are getting heartily sick of starting every morning with the question “what mindless drivel are the FCA asking we to waste time and money on today?” And judging by Wheatley’s witterings, he doesn’t seem to realise that businesses would like to not just sit in a ring around him, tongues out, panting and obediently asking “what shall I do today master?”

  7. If it is a surprise that Banks took a commercial business decision not to play ball you have to question the intelligence or the arrogance of our regulator.

    Didn’t they take notice of all the feedback given to them pre RDR?

  8. “They expected the industry to professionalise”. It would be useful to understand what Mr Wheatley means by that statement. Was the industry made up of highly paid amateurs before RDR? Was the industry a pile of rogues before RDR?
    As an industry that produced 20% of the country’s GDP prior to RDR something must have been going right; something must have been professional.
    With complaints (excluding PPI) at very much less that 1% of any calculated mark, the industry must had have some positive qualities.
    I don’t think anyone would deny that improvement was both possible and desirable.
    But to imply that the whole industry had to “professionalise” demonstrates just how far out of touch the Regulator had become. Please explain in detail what you actually mean. Vague, generalist phrases may sound good for a gullible Press, but they provide no guidance in real life.
    It may have been rather more professional of the Regulator if they had discussed the changes of RDR with the industry and taken on board the feed back. The FSA went into RDR not knowing or understanding the implications of a high proportion of their own rules. That is not professional.
    Professionalism is not an adjective I would readily associate with the FSA. It seems as though the FCA may be in the same ballpark.
    Given that the Banks were shown to be sleep walking into a financial disaster in 2008, I find it highly revealing about the FSA/FCA’s grasp on reality when the Chief Executive admits to being taken aback by the banks withdrawing from the advice market. One would have assumed that after the 2008 debacle the FSA would have been more au fait with the position of the banks. Obviously not.
    Perhaps the Banks were not a paragon of virtue, but like any other commercial organisation their main aim is to provide a return for investors and a decent living for their employees. If the banks believe that these objectives are not a viable proposition under the current weight of regulation then, instead of being rude about them, the FCA should be talking to the Banks. That would be professional. But obviously there is still no dialogue. How can one regulate without dialogue.
    Basing a structure on perfection is unprofessional. Real life is grouchy, changeable clients, irascible advisers and greedy, administratively incompetent providers. Start from that base and the rules may just be based on a more realistic approach to the real world. But above all speak to the world. And by that I do not mean “mouth words”.
    Mr Wheatley please explain in detail what you mean by “professionalise”, and include in the statement the assumptions upon which your specification is based.

  9. Martin Wheatley Unbelievable!!!!!!!!!!! no more said.

  10. I had hoped this head of the FCA would be better than the last clown they had but the more statements I see from Martin Wheatley the more I begin to understand he is just as bad. Where were the FSA in their RDR discussions about how the banks were going to progress with this, or was it just a case of oh well they’ll just have to get on with it? The regulator has possibly been taken aback by the extent of the withdrawal of banks from the mass advice market, and feels that banks are only developing advice models now that they should have been working on a year ago.
    This might be because they couldn’t see how it was going to work, had mixed messages from the regulator and instead sat on their hands watching Rome burn whilst the FSA/FCA fiddled.
    The guy says; they are more or less where they expected after RDR. Who is he kidding and this is just the tip of the iceberg. Unless there is a reality check and someone starts speaking the truth this industry will decline further.
    There is such an arrogance about these people who have caused so much damage but know regardless of how many people they hurt they have careers with the likes of Barclays etc.

  11. “What we had with a large number of retail distributors is a slowness to revert to business models that are RDR compliant.”
    RDR may produce compliance but if profitability is not there, what is the point?
    I think you keep getting FS confused with a charity Mr W. Do you and your cohorts give of your free time?
    You made the rules but not everyone wants to play. what do you have to complain about?

  12. Once again the FCA is trying to suggest that we should work like solicitors and accountants.

    The reality is people wouldn’t use them unless they had to.

    Another reality is that whilst they may charge an hourly fee many have a minimum number of hours that they will charge regardless of how much work has actually been done.

  13. Julian Stevens 18th July 2013 at 5:03 pm

    Frankly, I’m surprised that Mr Wheatley’s surprised. The banks will NEVER be able to get with the RDR.

    An upfront fee for advice before the presentation of any product/s? Why didn’t the FSA insist that not less than a third of whatever the intermediary might be hoping to earn from the product sale must be charged upfront?

    Customer Agreed Remuneration as opposed to a standard percentage cut from the sum being invested in the product? Why didn’t the FSA outlaw percentage charging?

    A contract setting out a defined level of ongoing service in return for a defined level of ongoing AC? Why didn’t the FSA insist that this must be discussed with and explained to clients at the point of sale?

    These basic precepts of the RDR are TOTALLY at odds with the whole selling model of the banks, which is basically to flog it, forget it then move swiftly on to the next customer who’s just deposited a large sum of money in his savings account.

    What did the architects of the RDR expect? That the banks would transform their entire modus operandi overnight?

    The regulators evidently inhabit an entirely different world from the rest of us.

  14. First, accountability.

    “In a healthy democracy, the contract with the voters is simple. I voted you in. You’re responsible for what happens. If things go wrong, I’m going to make you answer for it. And if I don’t like the answer, I’m going to vote you out. That is what accountability means.

    The problem today is that too much of what government does is actually done by people that no-one can vote out, by organisations that feel no pressure to answer for what happens and in a way that is relatively unaccountable.

    This is a big part of the reason why people feel so powerless in Britain today. They don’t have enough opportunity to shape the world around them. And it leads to the anger, suspicion and cynicism that I described in my Open University speech.

    I’m convinced that the growth of the quango state is one of the main reasons so many people feel that nothing ever changes; nothing will ever get done and that government’s automatic response to any problem is to pass the buck and send people from pillar to post until they just give up in exasperated fury”
    David Cameron July 6th 2009 in a speech entitled people power.
    I guess I will be voting you out on this one Dave.

  15. It just shows you how devious Wheatley & the FCA are. By giving the reduction in advisers based on 1 year Dec 2012 -2012 this does not show the number of advisers who left from when RDR was forced upon us . What care the number from say Dec 2007 to 2012? I would say that this figure would be most telling!!!

  16. Obviously the fact that the FCA will have about 25% less Advisers paying fees based on last years figures and expected another 10 to 15% reduction in IFA and bank/BS advisers in 2013.
    When the reality the FCA starts to realise their funding source is drying up they might start to engage but it does not seem the light has gone on yet.
    As per the comments the FCA inhabit an entirely different world to the rest of us. The FCA lives in a none commercial environment…it just askes for more and more money whilst destroying the incomes of the firms paying them.

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