Richards says it is inevitable that RDR will be extended to mortgages, with the FSA leaving the door open to this possibility in its interim report.
He says: “I think a lot of mortgage brokers are in denial and will try to argue that it should not be applied to the sector but I do not see how this could not eventually happen.
“When you read through the initial RDR paper, I think there are very clear indications that it will be extended to the mortgage sector. It recognises the fact that over 50 per cent of advisers have dual status and operate both in the investment and non-investment sector.
“The regulator suggests that it would be a good thing if firms in mortgage sector adopted similar principles if they work in both sectors. For us, that simply means that whatever standards we apply to one sector of professional advice we should apply to the other – probably not to the same degree but I do not think you can separate the two.”
Richards believes that by burying their heads in the sand, brokers are missing out on an opportunity to shape the future regulatory landscape.
He says: “There is a very clear indication from the FSA in the document that it wants industry-led solutions rather than regulatory-driven rules.
“The one great opportunity that the industry has here is offering appropriate solutions that are better for both advisers and the consumer so that the regulator is not forced to impose any.”