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MPs challenge FCA over RDR success and adviser numbers

MPs have challenged the FCA over the success of the RDR and the regulator’s claims that adviser numbers have increased following the reforms.

In a testy exchange with MPs at a Treasury select committee hearing today, FCA chief executive Martin Wheatley said there had been a “big increase” in advisers because of the RDR.

He also claimed it would spur innovation, boost the savings culture and it has removed commission bias.

Conservative MP Mark Garnier quizzed Wheatley on whether the RDR had been a success.

Wheatley said: “The consumer is much better served by the new system. We have removed the commission bias that existed for some, not all, which was paid to the intermediary.

“We have a professionalised industry with more qualified IFAs and bank staff. And we actually have more advisers today than we had a year ago so we are seeing growth in the industry too.”

Garnier said there are “substantially fewer” advisers than three years ago but Wheatley said the decrease was due to bank exits from mass market advice, whereas financial advisers has seen a “big increase” in numbers.

Wheatley insisted there were a lot of advice models entering the market which could have a big impact.

He said: “When I first joined there was a lot of criticism of the RDR but mostly what I hear now is finer points about what RDR is delivered but not the wholesale condemnation.

“The most vociferous people commenting were the IFA community who, by and large, have just got on with it and made a good business from it.”

Wheatley says the FCA will publish an RDR post-implementation review this year and examine whether it has increased professionalism, removed commission bias and tackled the advice gap.

The TSC is considering an inquiry into the impact of the RDR next year but TSC chair Andrew Tyrie says it is likely to be after the election.

In August, Money Marketing research showed a 20 per cent fall in IFAs and restricted advisers, compared to their equivalent numbers for December 2011, from 25,616 to 20,453. It also showed a massive 44 per cent fall in bank advisers, from 8,658 to 4,809.

The latest FCA figures, published last month, show the number of financial advisers rose by 1 per cent between 31 July and 10 January, from 21,684 to 21,881. This is likely to reflect more advisers achieving QCF level four during the year.

The number of bank and building society advisers fell by 23 per cent over the same period, going from 4,604 to 3,556. 

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Statistics, lies, consultations and feedback – what do they all have in common?

    Astute advisers will recognise that they are synonymous.

    I fully expect the RDR report to give the FCA 9/10 with a gold star to boot and will ‘confirm’ a healthier, more transparent landscape with contented consumers, richer advisers and a cuddly avuncular regulator.

    Let’s see.

  2. From what planet does the head of the FCA originate. RDR is going to encourage saving. There are more advisers when figures prove there are not. What a farce. One thing he forgot is how much the FCA spend on flowers ,weekends away etc The FCA do not have the slightest idea of what goes on in the real world

  3. At first I had a lot of respect for Mr Martin Wheatley, I thought he was a breath of fresh air, but as the months are going by, the air is turning into gas- mustard!

  4. Liars! Cheats! Thieves! Crooks!

    I was going to say take your pick but actually all of the above apply.

  5. My criticism is from another standpoint.

    Mr Wheatley – the job is half done. You still permit commission on Life Assurance, Annuities, Equity Release and goodness know what else.

    Do a proper job before telling the TSC half truths about the removal of commission.

  6. PS

    And you also advocate computer ‘advice’ and in this case no doubt commission is paid too as after all the providers will claim it is execution only.

  7. Rodney W Leonard 4th February 2014 at 3:40 pm

    30,000 a couple of years ago goes down to 21,000 and we have increased, maybe a caurse in simple arithmetic is called for Mr Wheatley.

  8. ‘Wheatley says the FCA will publish an RDR post-implementation review this year and examine whether it has increased professionalism, removed commission bias and tackled the advice gap.’

    Please Mr Wheatley, skip the ‘examination’ & save on time and our costs. Your findings will be ‘ increased professionalism, removed commission bias and tackled the advice gap.’

    Then you will have a totally unbiased view on your way to your Knighthood and your £x million severance pay.
    The only reason that I want you to stay is that it will delay the next head of the FCA’s shake up, failure and final knighthood plus pay off at our cost.

  9. I was under the impression that the FCA’s own review found no evidence of wide spread commission bias so to claim that as a positive is a bit much. The figures definitively state that their are less advisers providing advice now than pre-RDR, to claim otherwise is idiotic. RDR itself has done nothing to promote a savings culture, if anything it has had the opposite effect.

    Where does the FCA get it’s information from? It is clearly not from speaking to the industry.

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