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Martin Wheatley: ‘Industry can learn from IFAs’

Martin Wheatley 480

Financial Conduct Authority chief executive designate Martin Wheatley says the rest of the financial services industry should look to the way advisers build long-term relationships with their clients rather than treating them as “profit centres”.

Addressing the Aifa annual dinner in London last night, Wheatley (pictured) discussed how the market had changed since the RDR was conceived six years ago, and how trust in financial services had been damaged by recent misselling scandals and the manipulation of Libor.

He said: “We have seen the misselling scandals that we are unfortunately still having to deal with, predominantly in the banking sector. We have seen a change in culture in much of the financial markets, where the consumer or the client has ceased to become valued for the long term, and has become a profit commodity for the short-term. I am delighted that is not prevalent in your industry but it is something that shakes confidence overall in financial services.”

Wheatley said the the biggest change that needs to happen is the level of trust in the financial services industry as a whole.

He said: “The great strength of your sector is that by and large you have not lost that trust. The great strength of your sector is you are close to your clients, you understand your clients and have a long-term relationship with them and you know you cannot treat them simply as profit centres.

“Unfortunately that has not been the case for every part of the industry, and I hope that much of the rest of the industry can learn the importance of putting the consumer at the heart of their business in the way your industry has traditionally done.”

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Comments

There are 20 comments at the moment, we would love to hear your opinion too.

  1. So what justifies RDR changes to IFA commission then?? I am sure most IFAs have been taking commission rather than charging customers and they have stilled looked after they customers. Talk about using a sledgehammer to crack a nut. And as all have duly understood the negative impact of the fee changes we need MAS and simplified products to try and counteract the effect of that advice will no longer be available to middle Britain.

  2. Does he see no contradiction in the below statement versus the coach and horses of RDR being driven through our part of the industry?

    “The great strength of your sector is that by and large you have not lost that trust. The great strength of your sector is you are close to your clients, you understand your clients and have a long-term relationship with them and you know you cannot treat them simply as profit centres.

    “Unfortunately that has not been the case for every part of the industry, and I hope that much of the rest of the industry can learn the importance of putting the consumer at the heart of their business in the way your industry has traditionally done.”

  3. The first time I have heard a leader realise and state the fact. He is on the right track! Hope we see some progress now in the right direction!

  4. Just 6 weeks before the FSA decimate the IFA industry and suddenly they have decided that we are not the devil incarnate. Once again it proves the FSA did not listen to those on the ground. There is still time to save the issue and postpone 31/12/2012 untill the consumer potential detriment has been assessed post RDR. If there is a will to really ensure there is no detriment the FSA could postpone for 6 months-12 months, properly consult with IFA,s(who are not unreasonable people) and come to an amicable sensible solution. It will not be easy, but better to postpone to get the proper result than railroad something through just to keep face and admit perhaps they were not perfect.

  5. So the fool that was Calum McCarthy was wrong then ! RDR is a repair to a model that wasnt broken in the first place !!

    So DUMP RDR then Martin !

    It really is that simple – or are you blowing smoke up the proverbial IFA A*se ??

  6. If customers are reluctant to pay fees when receiving advice, what make some advisers come to the conclusion that the customer would be happy to ‘pay’ a lot more, albeit in the slightly ‘stealthly’ fashion of commission?

    Although this is not a physical transference from my hand to yours, it is still a transfer of (quite a bit) of value from my investment to you – and for what exactly? Picking a provider who will do all the work and pay you handsomely in the process? I’m pretty sure that ‘commission’ isn’t coming out of the provider’s own pocket, so I wonder where it’s coming from then (That is a rhetorical question by the way).

    I don’t see why anybody would be upset about treating customers fairly – we are all customers in one way or another!

  7. I was at the dinner and heard the specch.

    My take? Sounds good, but what will it taste like?

  8. IFAs, with the exception of the rogue apples of which there are few, have always put their clients interests at heart, what do you think we do Mr Wheatley?

    This inane comment by someone who is proposing to regulate us in the future is just covering his own back, when the manure hits the fan, he will be first to say “we should have consulted the IFA sector more”

    Just hedging his bets now, so that he can keep his job.

    If there is genuine concern as expressed, that consumer detriment will occur, then unlike how the FSA has behaved in the past, the opportunity presented to the regulator is to step back from the precipice, put all plans to drive the industry over the cliff edge on hold by12 months and go through a rigorous analysis of the potential detriment to the consumer, BEFORE implementing it, not afterwards when a major part of the IFA sector will just give up, or worse,be de-authorised if they cannot achieve level 4 before cliff edge, leaving the 5 million estimated clients who will suffer the loss of or be unable to afford take advice as predicted by Deloittes.

    Extend the deadline for level 4 to the end of next year, continue to allow commission remuneration choices for consumers and this time get it right.!!!

    Doubtless those highly qualified planners who only deal with wealthy people will look upon us with disdain for fighting for our right to trade and the right to deal with middle to lower income clients on their terms, but I say do your thing and we should be allowe to do ours.

  9. to anon 10-31. Re last paragraph, agree, so why dont the FSA realise we are their customers. Basically because they have a monopoly and there is sod all we can do about it. We cannot all stop doing the job we enjoy doing(this might be the result of RDR) as millions, on top of those that are al;ready being marginalised due to the fact they do not earn a fortune and cannot pay all in one go wiould have no advisers.

  10. Fair play to Martin Wheatley – I think the head of the regulator (unlike the last one) has finally “got it”.

    Lot’s of us wouldn’t have a business if we didn’t do an absolutely first class job for our clients and establish long term relationships – in small communities, there is a great deal of “self regulation”, which up until now I’m not sure the bodies in Canary Wharf ever really understood previously.

    Whether saying the write words will be put into practice – we shall just have to wait and see – but our sector carries an awful lot of anger from feeling the harsh force of double standards of regulation for many years, whilst watching many banks run rings around the FSA.

    You do wonder when RDR Mk 2 will be implemented when the consequences and job losses hit home ………..but after the Treasury defended RDR Mk 1 and the 31/12/12 deadline, in the House of Lords this week, then I’d be very surprised if there is a climbdown.

    It’s all about saving face and not looking like another waste of resources as many feel MAS has been.

  11. I have de-authorised as an IFA because I am exercising my rights not to pay their fees along with all the others. Even doing the right thing for my customers over the past 25 years I feel I have had enought. RDR is a car crash waiting to happen and it will be a few years before there is a review into ” what happens to the UK retail financial services industry” 87 life companies have shut up shop in the past 15 years and the trend will escalate next year

  12. At last Martin Wheatley has opened the eyes of the FSA to acknowledge the worth of the IFA. We are the ‘Post Office’ of financial advice for the local communities but due to the FSA this service is about to be decimated with wide ranging detrimental effect on the long and short term financial well being of the country. As a result of adviser loss and face to face advice, we will as a country be less well provided for in retirement, savings and protection. Who will pay? The govt and ultimately the tax payer.

  13. Thoughts and speech are logical whereas actions are political.

    The sordid reality is that most regulators defer to the consumer lobbyists rather than inflict commercial reality on consumers.

  14. I cannot believe there are STILL some IFAs who think there is even the remotest chance of RDR being delayed. Wake up and smell the coffee – right or wrong, like it or not, it starts 31st December.

  15. To IFA 1.50pm. It will happen no doubt, but there is no reason for us to lie down and die. Thats been our problem ever since this started no collective real fight from us, just accepted whats given. Everyone is entitled to their view(its called free speech) and that has been the problem. People were frightened that if they criticised the FSA they would be targeted for a visit. Coincidentally some people who have been open and honest with their thoughts, have soon after had a letter or phone call from the FSA saying we are coming to visit. No doubt they would have found something to have a go about as people in business do make mistakes no mattr how they try to be perfect.

  16. Unfortunately RDR will mean that they will have to be treated as profit centres and the new rules prevent cross subsidy of advice costs!

  17. Get Real - RDR is here 14th November 2012 at 8:05 pm

    What is with your industry- if you believe you do right by the customer & provide a good service then what is the problem being paid transparently for it? Please put your money where your mouth is & RDR will seperate the IFAs from the Bank product pushers… it will help you win, because clients trust you and not the bank advisers… so embrace it & study for your Level 4 rather than wishful thinking about RDR going away. Seriously you may be looking a gifthorse in the mouth! It may be painful but if a piece of regulation separates the wheat from the chaff of product bashers pretending to be advisers… err what exactly is the issue??? Unfortunately its not Calum McCarthy that is looking like the fool at the moment…

  18. @ Mike | 14 Nov 2012 1:12 pm – “We are the Post Office of financial advice for local communities”.

    Postmen just deliver letters Mike, they don’t explain what’s inside them.

    I don’t think analogies are your thing!

  19. A.D.B | 15 Nov 2012 9:31 am

    The Post Office and Royal Mail are two separate services – Post Offices provide a hub for a lot of local communities, whilst the Royal Mail delivery post.

    If you are going to have a go at someone at least get your facts right.

  20. A.D.B | 15 Nov 2012 9:31 am

    The Post Office and Royal Mail are two separate services – Post Offices provide a hub for a lot of local communities, whilst the Royal Mail deliver post.

    If you are going to have a go at someone at least get your facts right.

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