Conservative peers have warned the Government it is “complacent” about the impact the RDR will have and is facing a “shambles” and a “crisis” in the savings market when it comes into force on 1 January.
Speaking in the House of Lords this week at the Financial Services bill report stage, Lord Howard Flight and Lord Naseby gave stark warnings about the impact the reforms will have.
Flight said: “There will be a significant shambles in the savings industry next year. The insurance and life companies tell me their systems are nowhere near ready and they are not clearly organised as to how to conduct their business post-RDR. There is a very powerful argument for a pause if not some adaption.
“The FSA, FCA and Treasury are quite complacent about what is going to be a serious situation.”
Last year, the Treasury select committee recommended a one year delay to the RDR after its inquiry into the reforms, but this was quickly dismissed by the FSA.
Lord Naseby said he does not believe enough people will pay up-front fees for advice.
He said: “Savers do not have enough resources to fork out around £500 or considerably more on fees.
“It is all very well ploughing on because it is happening in January, but there jolly well better be a Plan B. I fear very much that after three or four months there will be a major crisis.”
But Treasury commercial secretary Lord James Sassoon said the RDR will go ahead in January to tackle “devastating effects of poor financial advice”.
Ned Naylor & Co owner Ned Naylor says: “The Government needs a Plan B because otherwise it is all going to go wrong. We have been pointing out to the FSA for nearly two years that there is going to be considerable consumer detriment as a result of the reforms.”