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.