View more on these topics

MP calls for regulation moratorium to apply to IFAs

An MP has called for the Government’s regulation moratorium on businesses employing fewer than 10 people to be applied to small IFAs with regard to the retail distribution review.

The moratorium was announced by Chancellor George Osborne in his Budget statement last week and exempts all businesses employing fewer than ten people and all genuine start-ups from new domestic regulation for the next three years.

During the Budget debate this week, Conservative MP for West Worcestershire Harriett Baldwin called on Treasury financial secretary Mark Hoban to raise the issue with the FSA..  

She said: “I suggest that he take this opportunity to suggest that small IFAs employing fewer than ten people might be exempt from the increased regulation in the retail distribution review.”

Hoban was present at the debate but did not respond to Baldwin’s suggestion. Baldwin was responsible for securing the parliamentary debate on the RDR last October.

In a separate debate in Westminster Hall on access to financial services in rural areas, Shadow Treasury financial secretary Chris Leslie said he was concerned about the impact the RDR and the FSCS levy would have on the ability of people to access advice.

He said: “There are a number of factors coming together here, some of which have perfectly reasonable arguments behind them, but which together could place at jeopardy the ability of individuals to get free or low cost advice.”

Hoban said Leslie “should be aware” advice is not free and the RDR was intended to make charging for advice more transparent and that the increased qualification level was there to improve the quality of advice.

Earlier this month Leslie pressed for a review of the FSCS including subclasses.

Hoban said: “If he thinks the FSCS levy should be reformed and someone else should pick up the levy, he should be clear which sectors. The scheme at the moment ensures sectors swallow their own smoke”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. This has to be the most sensible thing that anyone has ever suggest

  2. Hoban said: “If he thinks the FSCS levy should be reformed and someone else should pick up the levy, he should be clear which sectors. The scheme at the moment ensures sectors swallow their own smoke”

    Hoban is a “useful idiot” for the fsa.
    If he thinks sectors “swallow their own smoke” at present, that just shows how stupid and out of touch he is with everything, except what the regulator feeds him.
    Hoban is not willing in any way shape or form to listen to the other side of the argument.
    What a dangerous position to take.

  3. Hoban clearly has his own agenda and “listening” is not something he seems bothered with. “Done deal” as far as he is concerned

    You probably have as much chance of getting changes to RDR as you have of winning the lottery.

    It makes no difference as our Government clearly cares little or has discovered it has no power over the FSA and few MP’s who do care are just being sidelined as not relevant.

    Even the Treasury Select Committee meeting with Mr Sants seemed as if it was just a jolly good friendly chat with few forensic questions and IFA’s were badly let down as a result even by those who claim to support our concerns ended up putting tame questions almost as if they had been “got at” and have gone quiet since!.

    Probably bigger powers at work here.

    Either way it is a disgrace.

  4. It’s all very well for Mark Hoban to claim that raising qualification levels will improve advice standards, though is this statement backed by any substantive body of evidence that the root cause of poor advice is lack of higher qualifications or that forcing everyone to attain higher levels of qualifications will fix the problem? Many have tried to argue that the answer to both questions is a resounding NO, but their voices have been ignored.

    Adviser charging (on which basis many IFA’s already operate) may put a stop to sales people recommending Bonds instead of Collectives, but will it mandate the provision of ongoing service in the form of regular reviews or a clear explanation at outset that none is to be provided (if that’s to be the case)? We read recently of a Chartered firm now being subjected to the heat of regulatory intervention as a result of selling large volumes of UCIS, possibly due to the high levels of commission available so clearly, in that instance, qualifications don’t seem to have made much difference, do they?

    As for the FSCS levy, one wonders why Chris Leslie didn’t raise the proposal of a product levy. It’s all very well for Hoban to say that the current system “ensures sectors swallow their own smoke”, yet still the current system is widely perceived to be manifestly unfair. The latest additional FSCS levies have arisen as a result of the regulator having failed to do its job, notably with regard to KeyData, over which the FSA had in its possession as long ago as 2007 information on which it should have acted but didn’t. So, if we’re talking about “sectors” being required to swallow their own smoke, why isn’t the FSA having to swallow some KeyData smoke?

    Having said all that, I don’t think that exempting firms with less than 10 employees (presumably RI’s) from the RDR is a practical proposition. Why should a firm with 9 RI’s be exempted whilst a firm with 10 RI’s should not? Apart from anything else, who’s to say that the firm with only 9 RI’s poses any less a regulatory risk than another with 10? I’m all for high standards of advice and integrity, but initiatives to promote these higher standards should be based on the FSA using its resources “in a way that gets the most value out of the effort that they make, whilst delivering significant benefits to low risk and compliant businesses through better-focused inspection activity, increased use of advice for businesses, and lower compliance costs.” It might have been better for Ms. Baldwin and Mr Leslie to raise with Mr Hoban why the FSA has been allowed to grant itself a unilateral opt-out from the document from which that text is taken.

  5. The Lord’s Prayer has 66 words.
    The Ten Commandments have 179 words.
    The Gettysburg Address is just 286 words.
    The small FSA handbook 400,000 words
    The FSA handbook has approx 4,000,000 words.

    OK, so I didn’t count the words in the FSA handbook but I reckon 400 words per page is a good average. Mark Threipland, an FSA lawyer, said: “We have launched the tailored handbooks as part of our commitment to make the FSA easier to do business with”. Cheers Mark! So what is the FSA idea of helping the small business? The smaller rulebook is 1,000 pages long – about the same size as Tolstoy’s War and Peace!!!! Still this is better that the full 10,000 page handbook which still exists for larger firms.

    RDR will be the straw-bale that broke the IFA back.

  6. Agree entirely with Julian Stevens.
    Especially regarding higher qualifications – I was aware of someone, a qualified lawyer, who passed our Level 4 exams (the equivalent) in the mid 1990s, and so was qualified to advise anyone on almost anything, but he freely admitted that he knew absolutely nothing about the IFA world in reality and he struggled to actually provide good advice.
    The FSA has gone about this whole sorry mess the wrong way – and Hoban is merely a puppet, capable of no original or questioning thought.
    How sad this has all become.

  7. Hoban said Leslie “should be aware” advice is not free and the RDR was intended to make charging for advice more transparent and that the increased qualification level was there to improve the quality of advice.

    The number of complaints against Towry Law blow the theory of ‘improving the quality of advice’ out of the water.

    I know of a number of solicitors and accountants who are well qualified but I would not trust them as far as I could throw them.

    Honesty, integrity and a degree of morality are more important than professional qualifications.

  8. What an utterly dreadful idea. Why should firms with less than 10 employees get a free pass when the rest of us have spent the past few years slogging our guts out?

  9. Rock on Harriett; go for it!!

  10. Anon of 3.42pm !!

    I agree but !!

    Stop whinging !! I have never met an IFA that has slogged his guts out, that is why they are IFA,s.
    Especially those “We only charge fee,s brigade, so full of themselves, as far as i am concerned you are all a bunch of idots.

  11. @AI Lover
    Did you choose that name yourself?
    If all IFAs are a bunch of idiots or even idots why are you on a blog associating yourself with them?

  12. Al Lover | 31 Mar 2011 10:02 am

    Anon of 3.42pm !!

    I agree but !!

    Stop whinging !! I have never met an IFA that has slogged his guts out, that is why they are IFA,s.
    Especially those “We only charge fee,s brigade, so full of themselves, as far as i am concerned you are all a bunch of idots.

    ————————————————————————-

    The feeling’s mutual, chum.

  13. To: Al Lover | 31 Mar 2011 10:02 am 3rd April 2011 at 11:31 am

    It seems to me that Hoban is an argument for: Don’t vote you’ll only encourage them!
    Hoban and the FSA RDR will achieve a saving culture wasteland of state dependency. No savings, pensions or protection. No advisers but plenty of bankers, public sector employees, regulators and consumers with rights but no responsibilities. Then the wakeup call: There is no pot unless you work for it and save for it.

Leave a comment