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MPs rail against RDR

Debate point: Conservative MP Mark Garnier called for rethink on grandfahering and commission
Debate point: Conservative MP Mark Garnier called for rethink on grandfahering and commission

MPs launched a sustained attack on the retail distribution review during this week’s parliamentary debate on the regulation of IFAs.

In an unusually well attended backbenchers’ debate on Monday evening, heard by around 80 MPs, concerns were voiced over qualifications, grandfathering, regulatory cost and the impact of an advice gap.

Treasury select committee member Conservative MP Mark Garnier said it was not MPs’ intention to derail the RDR, but he warned: “In addressing the problems, the FSA, through the RDR, introduced issues that disproportionately affect the IFA community. I fear that without the FSA looking again at grandfathering and without a rethink about commission, independent financial advice will become the preserve of the wealthy only.”

Many MPs called for the introduction of some sort of grandfathering saying it was common practice in most industries.

Conservative MP Heather Wheeler, who is an affiliate of the Chartered Insurance Institute said: “I was trying to find other areas in business where new rules were to be introduced who were also not given grandfather rights and I just cannot.”

Labour MP Nia Griffith said getting so many people qualified in such a short period of time was “not really a practical idea at all” and that exams did not test the integrity of IFAs.

Conservative MP Geoffrey Clifton-Brown went further, suggesting the RDR should be put off for five years to help the new regime bed in properly. He said: “I say to Mr Sants, who is he to put 5,800 businesses out of business at the stroke of the pen and what is the problem that needs fixing?” Conservative MP George Hollingbery said: “When so many people have clearly neglected to provide for their later years, it does seem to me to be perverse that we should be reducing the number of suppliers in the market.”

Treasury select committee member and Labour MP George Mudie said there seems to be a “lack of interest” over the reduction in choice the RDR will present to consumers.

Commenting on FSA chief executive Hector Sants’ statement last week that losing up to 20 per cent of IFAs due to the RDR would be an acceptable cost, Conservative MP Harriett Baldwin said: “Can you imagine the outrage there would be in this chamber if a minister came to the box and said I am going to put between 20 and 30 per cent of an industry out of business.”

Conservative MP Guto Bebb said: “We have a coalition Government stating quite clearly that we want the private sector to be creating jobs, that we want to get rid of the red tape and bureaucracy which has stifled a generation of jobs within small business, I do find it odd this particular sector is being earmarked for different treatment.”

Treasury select committee chairman and Conservative MP Andrew Tyrie said: “There is one crucial point we must just get across to the FSA, which is that the increase in these compliance burdens is going to be paid for by the consumer.”

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  1. This whole head of steam seems to be centred around qualifications and commission. In my view these proposals are not entirely unjustified. As to the MPs who are so vociferously stating that qualifications don’t prove a lot (they don’t but that’s beside the point) they are being hypocritical in the extreme. Take the redoubtable Ms Baldwin. If she honestly believes that qualifications are so irrelevant then consider this:

    She went to a leading Public School, followed by Oxford, followed by an MBA and I know that she received training at JP Morgan. So how come, if she doubts the link between competence and exams, that she didn’t leave school at 16?

    Oh, and just look at the attainments of her colleagues, not to mention those of Andrew Tyrie. One of the main criticisms of Mr. Tyrie’s predecessor was that he wasn’t very well qualified for his position of Chairman of the TSC. Come off it love – your agenda is pretty transparent.

    But for me the real issue concerns all the nonsense of so called advice divisions – simplified, basic restricted – none of it advice. The only real advice is Independent. And then the Canaries make the requirements a riddle surrounded by a mystery wrapped in an enigma. It would be nice if they would define it in plan language using words of one syllable, instead of ‘frightening the horses’ and providing ammunition to vested interests who are trying to scare IFAs into going restricted.

    Of these we her very little from our new (and they all seem to be from the May 2010 intake) self appointed champions. When all the dust settles what will they have achieved for us? Probably nothing, but they will have gained notoriety and made their mark with the hoped for results of preferment in their Parliamentary careers. Cynical – moi?

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