Tenet and Aviva says Barclays’ decision to close its advice arm should prompt the Government and the FSA to think again about the retail distribution review’s impact on access to advice.
Money Marketing revealed last week that Barclays will withdraw its advice offering for retail clients through its branch network. News of the closure follows an internal review of Barclays Financial Planning, which concluded the business is no longer viable.
A spokeswoman says: “Our decision to exit the market is not a direct result of the RDR but we do anticipate that the outcome of the RDR may have an impact on the performance of the business.”
Some industry commentators have suggested Barclays’ withdrawal from the market could mean other banks follow suit. Money Marketing revealed research by Ernst & Young that shows it will not be financially viable for banks to offer advice to the mass market under the RDR and that banks will have to charge £200 an hour for advice just to break even.
Speaking to Money Marketing at the Tenet conference in Ascot last week, Tenet distribution and development director Keith Richards said: “The original belief that the RDR was running into the hands of the banks is to some extent dislodged as a result of Barclays’ decision. It is a significant announcement that both the Government and the FSA should sit back and take stock of.”
Other panellists agreed. Aviva head of sales Andrew Ward said: “Barclays’ decision was disappointing as it suggests that the mass market is potentially going to be underserved as a result of the RDR.
“I hope this sends a signal to the regulator and the powers that be that they may have a bigger problem on their hands in terms of access to advice than previously thought.”
Aifa director general Stephen Gay said: “The Barclays’ announcement is interesting because it shows that banks will struggle with the RDR far more than IFAs will.”
But Personal Finance Society chief executive Fay Goddard feels the Barclays’ announcement will be a one-off.
She says: “From our experience with exam sittings, a lot of other banks are getting on with it so I would not say necessarily that Barclays’ decision will reflect the way all banks will go. The emphasis for Barclays was on cost, so it was a purely commercial decision. To me this has just served to open up more space in the professional advice arena.”