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MPs frustrated with RDR trade body grilling

Treasury select committee members have outlined major concerns about the impact of the RDR, with some expressing frustration about the way IFA bodies responded to their grilling.

Giving evidence at the committee this week, Aifa director Robert Sinclair and Institute of Financial Planning director of operations Steve Gazzard were scrutinised by MPs over the large number of complaints they had been getting from IFA constituents regarding the RDR.

Sinclair told MPs he believed the FSA had lost its way with the RDR. He said he agreed with the QCF level four benchmark but branded the “cliff edge” of 2013 to gain the RDR qualification as “unfortunate”. Gazzard said his membership had not raised concerns about the higher qualifications.

But MPs expressed concern that their answers were out of sync with the anger that they have felt from IFAs about the review.

Conservative MP Andrea Leadsom said: “This whole discussion this morning brings out my worst fears which is that trade bodies never really say what they think.”

Leadsom said she is concerned the RDR will lead to less people getting advice and saving for their future. She said: “You have a problem with some of these things but your message is not being heard, this is your chance to tell us what needs to be different. I wonder, are you actually taking it?”

Sinclair replied that Aifa has been making such points to the FSA for four years but they have not been listened to.

Gazzard told the committee that it was impossible to compete with the multi-millionpound budgets of banks and insurance firms’ PR machines.

Labour MP George Mudie challenged the pair directly over an older IFA in his constituency who is concerned about passing new exams.
He said: “Have you not any compassion for a fella coming to the end of his working life and you have stranded him?”

Sinclair pointed to Aifa’s work in developing an alternative qualification but suggested the industry was having difficulty finding enough work-based assessors.

Gazzard said: “We would be willing to consider workplace assessments but we rem-ain to be convinced they would test at an adequate level.”

Committee chairman and Conservative MP Andrew Tyrie said: “We are here to represent voters and consumers and you have sensed some frustration around the table that we have not had it quite as forcefully as we would like. We have all heard it ourselves time and again from the people you represent. They moan incessantly about the FSA, it seems as if a long shadow of the FSA is cast over here, muting your criticisms.”

Conservative MP Jesse Norman said: “What you have said, between you, over the past 45 minutes is that you acknow-ledge the RDR has cost four times what it should have cost, the consultation was poor and the initial ideas that it set out to achieve have fallen away.

“Does it not strike you therefore that it is frankly a bit of a fiasco as far as the retail investor and particularly the small investor who might use a commission-based broker?”


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There are 28 comments at the moment, we would love to hear your opinion too.

  1. Labour MP George Mudie challenged Aifa director Robert Sinclair and Institute of Financial Planning director of operations Steve Gazzard directly over an older IFA in his constituency who is concerned about passing new exams.

    He said: “Have you not any compassion for a fella coming to the end of his working life and you have stranded him?”

    I think we all now know the answer to that question, and its a resounding NO, I for one am quesioning my membership.

  2. I am at my networks annual general conference tomorrow and shall be questioning our membership of AIFA

  3. It’s about time AIFA and IFP got thier collective heads out of the sand! Never mind the comment off Alan questioning his memebership soon these “trade” bodies won’t have a trade to represent, or at least not with the critical mass to make it economically viable for them to continue?

    Over to you guys speak up or prepare for extinction!

  4. Has the AIFA actually consulted it’s members about what stance they would like it to take in representing their interests- by ballot or other less “red” methods.

    They say the FSA does not listen to them, I suspect that is because under the previous regime, to shout out, loud and proud, was considered “rude”.

    So much for good manners then!

  5. I am a mortgage adviser and not an IFA, but I have felt for a long time that AIFA and AMI were out of touch with the opinions of the advisers and that they were paying lip service to the FSA.

    Altough I am very grateful to the MPs for raising their concerns about the different realities experienced by the trade bodies and the advisers it is also a huge worry.

    I question whether the trade bodies we have today are equipped to continue working for us or whether we need to establish a new trade body. Time is running out, and we have to decide soon.

  6. Random thoughts on the RDR debate 20/10/10

    Several members of the TSC were also at the RDR debate 20/10/10 and contributed to an IFA positive debate. All in all the IFA was well represented until Mark (Rubber Stamp) Hoban MP got to his feet and lowered the tone of the debate especially by his refusal to take questions and of course his McDonalds attack.

    The McDonald remark was a well thought out and calculated insult! However, I seem to recall it was a burger that stuck in John (AIFA) Gummers throat following the mad cow incident so maybe Hoban will choke on his words too.

    As for the other MPs at the debate I would suggested that they would feel equally slighted at Hoban’s offhand refusal to take questions. I noted that Mark Garnier MP (TSC) was quick to suggest (and Harriet to agree) that a motion should be put in for a three hour debate! Maybe a three hour debate will give Hoban the time to choke on his burger and answer the many questions that he refused this time around.

    What a sad day for the Conservatives to have a minister like Hoban in such a position! he has more in common with the problem than the solution. Of course Hoban wants to rubber stamp RDR and for all this to die the same death as the IFA and a three hour debate would upset him.

    Finally, the TSC nailed AIFA to the wall over their failure to defend older IFA’s. Personally, I didn’t know AIFA were anti grandfathering. I wonder how many AIFA members were aware of that and are now happy to continue funding such views with their membership fees?
    It seems we owe very little to AIFA and PFS who have sold us down the river. It was interesting to see several members of the TSC at the Harriett Baldwin debate 20/10.

    The TSC is headed up by Andrew Tyrie author of The Leviathan at Large, the authoritative attack on the FSA and its is worthy of comment that Harriett helped Andrew in its production. It would seem that this powerful TCS is pro IFA and we must do what we can to maintain this – but no thanks to AIFA!

    Hoban is nothing more than an FSA spore trying to reseed itself and grow back once more.

  7. I believe the FSA has forgotten one thing when considering RDR: commission based advise for certain clients are the only method for those clients to pay for the cost of the advice being given.

    Providing advice to a client on the basis of a commission arrangement should be no different from advice being provided by way of a fee, the only difference being the cost of the advice under the commission arrangement, will be included within the product being recommended.

    Should the need arise for a client to need pure financial advice, with no product involved paying commission, then the advice can be provided on the basis of an agreed fee, with the said fee paid by the client.

    In summary, beit commission or fee based advice, the recommendation should be the same and the choice of paying for the advice should remain with the client and the FSA should not be allowed from a Human Rights point of view, to remove the commission option because this is restricting the clients rights.

    No doubt this will fall on deaf ears because it is the FSA making the rules!!!!!!!!!

  8. I think this denonstrates how spineless our trade bodies have become.
    Most IFA firms that have been around that long feel that they have been banging their head against a brick wall since 1986 and years of frustration have ended with us all just toeing the line out of fear of being kicked out of the industry.
    Yes there were lots of bad IFA’s but most have now left the industry, but what we have now is over regulated IFA’s who in the main work relentlessly for their clients, but we are continually reminded by what we see that the banks have little if any regard for their clients or regulation.
    It is clear that they are mearely working on the premise that if they can flog enough of any product that will have made sufficient profits to meet the complaints they factor in that they will receive.

    Banks should be barred from selling any financial investment product as indeed should any business that does not provide a review service. That way we will end up with firms that have a genuine aim of looking after their clients.

    Yes we want raised standards, but this should not be to the extent that the general public are disenfranchised from the advice process to to resultant higher costs as has happened in the legal profession, nor should we then have a situation where Banks can opt for a scripted lower level advice process that allows businesses like the banks to flog whatever they like.

    When is the industry going to wake up and smell the coffee. Our regulator has too much power and currently everyone is too afraid to say anything.

  9. The MP’s are right, we are not making an impact because we are fighting on two fronts. Will ordinary people pay for advice? Answer NO. Should people pay for advice from someone who doesn’t know an ETF from a QROPS? Answer NO. Drop the qualifications winge and we might start making progress on the real issue here.

  10. I left the CII Aifa the LIA years ago and supported IFADU the only honest voice of reason.
    Perhaps others will now.

  11. I am now retired but still take an interest in Fin Services.I wonder if messrs Sinclair & Gazzard are not actually frightened of FSA.In my opinion the person who should have been present at the TSC meeting is Evan Owen–a man who would tell it as it is.

  12. Am I missing something – Steve Gazzard represents a training agency – so it is in his interests to support the RDR. He is not representing us and the sooner this is pointed out the better. He uses “politician speak” – “his membership had not raised concerns about the higher qualifications” as he is only representing people who are doing exams. Why don’t they have someone like Ken Davy answering on behalf of IFA’s as he represents all strata of advisers.

  13. At last….some sensible discussions focussing on the needs of Mr and Mrs Average. WHY HAS IT TAKEN SO LONG? Its a disgrace and the beneficaries will be the banks. Who’s pulling who’s strings?

  14. I lapsed my AIFA membership some time ago after accepting I was wasting my money on them as they were not supporting us older IFAs. It was my intention to retire in 2013 what now?

  15. I am sensing this has been a lost opportunity. For the first time in over 13 years we have a government prepared to listen and we may have blown it. This needs rescuing fast otherwise it could make regulation even harsher under CPMA. Inevitably it has to be told like it is by practitioners. Alan Lakey and Evan Owen are the boys for this!

  16. Neil F Liversidge 21st October 2010 at 10:17 am

    I don’t want this to sound like a ‘vote for me’ pitch but I am standing for the AIFA Council in the upcoming elections because I believe that AIFA must take the hardest possible line with the FSA. I also believe firmly in direct lobbying of MPs. I’ve been doing it for years and so have others like Simon Mansell, Julian Stevens, Alan Lakey et al. Most MPs do actually understand the danger to advice posed by RDR once they have it explained to them. Hoban is trying to pass the buck by saying the Treasury can’t tell the FSA what to do, but in reality that is tripe. The FSA won’t change until the government forces it to change. We must all keep up and increase the pressure until enough MPs make Hoban and his bosses see sense.

  17. How on earth can the Führer’s at AIFA claim that they were unaware of the concern that the taking of further exams were causing among normal IFA’s.

    I was unfortunate enough to put this point in person directly to one Chris Cummings, who said that they were aware of the level of distress the new qualifications were having on his membership, and that they were constantly making the point to the FSA.

    Perhaps the point was put across in whispered tones and you may call me cynical but could it be because of one of the two possibilities:-

    1. AIFA were planning to make as much money out of their own qualification.

    2. Our very own Mr Cummings was in line for a very lucrative £200,000 per year QUANGO job. (Not casting dispersions only suggesting his mind might have been elsewhere). If I were being cynical I may have come up with alternative reasons.

    It is time for all IFA’s to decide what value the bodies that purport they have our best interests at heart actually do, or perhaps we should elect (heaven forbid) some of the MP’s who are actually asking the questions to represent us.

  18. I am dealing with a lot of annuity clients now who took pensions that they were sold by some tied adviser many years ago, who no doubt was paid a fortune in commission for doing so.

    The plans are not great when you compare them to the likes of a stakeholder and off course they were high in charges. The point is my clients have a retirement pot now because they were SOLD a regular premium pension and it was worthwhile for someone to do it.

    Say what you like about commission and I accept it in the past has been excessive, but how many IFA’s are out recommending regular premium stakeholder pensions to our clients on 20k-30K. I would hazard a guess not many, as they pay nothing and clients on that income aren’t into paying fee’s.

    I have moved towards fee’s and would gladly be 100% fee’s to remove any question of bias in advice. Just give me a chance to ring all my decent hard working clients on 20k-30K a piece and tell them to sod of as the regulator says the way they want to pay me is in appropriate.

    As for Level 4, I am with it in principle unfortunately the only level 4 qualification I have found that adds to my business is the new IFS one, so 2013 is very tight. If you’re an everyday financial adviser the CII are peddling pointless irrelevant qualifications.

    I am not for grandfathering of work based assessments, either we dump the whole concept and make regular retakes of the basic FPC’s compulsory to ensure accurate everyday knowledge or we move RDR back 3-5 years.

    As for our trade bodies, I am not surprised they are failing us and they hire non financial advisers to their key positions and who is to blame them, they have only ever been able to deal with the FSA who don’t even listen to anyone as soon as they hear the word advisor. Now they have the ears of some people who could really help them change things and they are totally impotent, unable to perform and totally unaware of how far they can push it.

  19. A new record.
    How long did it take the TSC to expose the industries trade bodies, for what they are?

  20. Alan Lakey shouild represent those of us who are unhappy with the way the RDR will force older advisers to quit. If you are 2 or 3 years away from retirement, why should you be forced to take further exams or retire early. Financially, it is simply not good business sense to spend time and money on exams neither you or your clients will probably never benefit from.. The trade bodies have a vested interest in exams and are lying when they say that they are unaware of the distress the RDR is causing not just older advisers.
    How about it Alan can you get an audience with the TSC?

  21. My information is that AIFA have largely given up trying to lobby the FSA because the FSA gives no ground on anything that it doesn’t want to. Sure, there may be the occasional small, token concession from time to time but, by and large, the FSA has its own agenda and that’s what it sticks to regardless of any lobbying from the likes of AIFA or the Adviser Alliance (the latter having gone a bit quiet lately, I have to say ~ anything to report, Alan?).

    As a result, the trade bodies are planning to turn their attentions more towards parliament because, even though Hector Sants has claimed (on national TV) that the FSA is “entirely independent of government”, parliament, in the form of the Treasury, is in fact the FSA’s Master & Commander. How can it be otherwise? Were this not the case, then the FSA would be answerable to no one (on which point I was surprised to note that Stephen Sackur failed to press Hector Sants).

    The Treasury’s master, of course, is by and large the government of the day and the government comprises politicians, so we have the unhealthy situation whereby regulation is inextricably intertwined with politics.

    So ~ the logical target for lobbying is the politicians, not the FSA. One might reasonably ask why it’s taken the trade bodies so long to realise this but, when you think about it, they have to be seen at least to have tried to negotiate with the FSA. Otherwise, the politicians would simply have asked what efforts had beeen made to win concessions by dealing directly with the FSA.

    So the battle has now moved to a new front and, with the FSA on its way towards being partitioned, all efforts must be made to ensure that the CPMA, as far as the retail financial services sector is concerned, is not just another FSA, with the same arrogance, the same lack of accountability and the same impunity from prosecution.

    And finally ~ Adviser Charging, though badly communicated by the FSA is, in reality, nothing more than commission by another name. The principal difference is that the customer will have to agree to the amount, which is just an extension of hard disclosure, with which we’ve all managed to cope pretty satisfactorily for many years now. I support the idea of tearing down the common misconception that commission is paid by somebody else and costs the client nothing.

    AC (or, as it would be better termed, CAR) doesn’t mean you have to charge fees (though in my view we all ought to for our pre-sale work). All it means is that you’ll have to justify the amount of commission (AC) you plan to take, as do many of us already (even though a few of my still-commission based colleagues tell me that I tend to undercharge). My response to this is that I don’t overcharge. Work it out for yourselves ~ AC/CAR doesn’t mean asking clients to pay fees.

  22. Hector Sants independent of government! what price he is awarded a knighthood in the next few years?

  23. To Sean Reynolds
    a) It is not actually necessary to pass an exam to know the difference between an ETF and a QROPS. And if one is advising on financing or protection, the knowledge seems irrelevant. So what is your point?
    b) Nobody that I am aware of is seriously questioning the industry having good qualifications – rather the timing and direction, namely the qualifications are backwards looking not forwards looking for the majority of current advisers.
    So on those two topics it looks as though your actually fighting with yourself. Not a good impression to the Committee..
    c) What, in your opinion, is the real issue?
    If you are going to criticise I believe you should also state what you believe the problem(s) to be. That is what the Parliamentary Committee is asking – and what you are so eloquently not saying.

  24. A question the MPs should have asked the trade bodies is “Are you scared of the FSA?” Is (as I suspect) the answer is yes, the MPs should then ask serious questions of the FSA and their methods and attitudes. I think they would find this very informative!

  25. Re Charles Fisher … scared of the FSA

    Absolutely look at the responses as low as 18 to so called discussion papers after the first RDR so called discussion paper.

    Look at the file full of letter to Harriett Baldwin and other MPs.

    No-one dares approach the FSA under this system.

    In addition Hoban said that the FSA did not answer to the treasury on regulatory matters.

    Could AIFA get this clarified for us please?

    Are we all supposed to log official complaints against the FSA for this mnatter to appear in front of the Treasury??

    There must be a procedure in place from government if the regualtory body goes haywire, what is that procedure?

  26. Of course people are scared of the FSA, it is the most powerful regulator on the planet.

    Give a human being this power and he/she will abuse it, in this case by simply ignoring common sense, this applies in all cases were regulators control the regulated, take any business which has to adhere to ever more prescriptive regulations and you will find businessmen and their representative bodies who are fearful of ‘inspectors’ who can often be vindictive. IFAs suffer from the most onerous regulation in return for causing the least consumer detriment, is that fair and reasonable?

    Is there balance?

  27. Dear Anonymous

    I would dearly love to give evidence to the TSC and it may well happen.

  28. Sorry, but the TSC is simply posturing here for their constituents. They won’t be accountable for any future misselling scandals so they can afford to pontificate. Put them on the spot and ask them their opinion of GPP commission being funded by “active member discounts” and see if they vociferously defend the status quo!

    The truth is that the industry lets itself down time after time. Its unfortunate though that IFAs will carry 99% of the personal pain from RDR. Product developers and executives at providers need to be more personally accountable.

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