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Neil Liversidge: My fantasy escape from a post-RDR nightmare


I had a wonderful day yesterday. My staff came into my office and asked for a pay cut. No sooner was that arranged than I had the power company phoning to say they were reducing my electric bill and the landlord was reducing my rent.

Filing my car up on the way home I was delighted to see fuel prices dramatically reduced. On my arrival at home, the kids announced they did not want new clothes or toys or food – and my eldest daughter planned supporting herself through college. Only when Scarlett Johannson called to invite me round for dinner did I realise I was dreaming.

I am not the only one given to fantasies if the FCA’s latest pronouncements are anything to go by. There has been much noise of late from our lords and masters, who are apparently unhappy that charges have not noticeably changed post-RDR. The moan is that the model of 3 per cent initial plus 0.5 per cent trail commission has changed into a 3 per cent initial and 0.5 per cent adviser ongoing fee model. Well, isn’t that a surprise?

Why would costs to clients automatically reduce, thanks to the RDR? A message to Mr Wheatley – what got cheaper, Martin?

Costs to adviser firms have certainly not reduced. On the contrary, whereas the trail commission model was low maintenance in terms of its payment, we now have to waste time managing cash accounts for ongoing fees. Added to that, of course, we have section K of Gabriel.  Whoever dreamed that up probably spent a previous incarnation torturing heretics for the Inquisition.

Markets drive pricing down, not regulation. In this business, regulation has only ever driven prices up. Some years ago, I took part in a radio discussion with a retired IFA who had left the industry in 1987. His angle was that these days advisers were all paid too much.  

“When you were in the business, how much did you pay your compliance officer?” I asked. After a pause, “Nothing” was his uncomfortable reply.  “We didn’t have compliance officers in those days.”  Right.  

And how much did he pay in regulatory fees?  He couldn’t remember how much but it was “A small amount to Fimbra”.  FOS fees? “No, we didn’t have them.”  FSCS fees? “No, we didn’t have those either”.  At this point, the interviewer stopped the fight.  A colleague who listened in said it was like listening to Mike Tyson working over Norman Wisdom.

The RDR is not the first go that the regulator has had at reducing our incomes without regard to our costs. 

Some years back, we had the menu which, the FSA decreed, would force commission down. Nice. Can somebody tell me, please, how I force down Martin Wheatley’s salary or Natalie Ceeney’s or Caroline Rookes’ or Mark Neale’s?

Nothing personal, folks, but they all take home a lot more than me for a lot less hours. I do not believe in the politics of envy.  I am sure they all earn their money and they are worth it.  But we are too.  Who says so? The market. Clients.

It is not like we live in a dictatorship, where we have clients delivered to the door by heavies who jam one arm up their backs while they write a cheque with their other hand.  There are no end of alternatives for clients who do not like our pricing model. We do not negotiate on charges – ever.  That is my decision.

Clients who do not like our charges can go elsewhere. Martin Wheatley et al, as we know, do not offer us the same option.

Neil Liversidge is managing director at West Riding Personal Financial Solutions



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There are 16 comments at the moment, we would love to hear your opinion too.

  1. A?

    My FSA bill, FSCS bill and PI is cheaper than last year.


    Not sure what you,re on about.

  2. We do live in a dictatorship, Neil ~ a regulatory dictatorship, a dictatorship in which the regulator decides on what we should all be doing, how we should be doing it, how we should be treating our clients, what data and in what format we must account for every penny of income and expenditure twice a year, how much we must pay for this, that and everything else and, on top of all that, it refuses to take any notice of anything anyone else might have to say on such matters. It’s required to account to no one for anything.

    Is that not a dictatorship?

  3. To some extent the politicians are too blame for failing to ensure that costs are reduced – or at least capped. I actually got a reply from David Godfrey, Acting Chief Operating Officer at the FCA when I expressed my concerns to my MP about the rising cost of regulation. The response was along the lines of these are the problems, this is what we are going to do about it and the cost therefore is…… In other words cost is not the priority for the FCA. Or put another way, the problems (i.e. PPI, interest rate swaps, pension unlocking) are so bad it justifies the huge expenditure regardless of whether it is affordable. In fact it was a most inane response lacking any tactical awareness of the problems we IFAs have and this is manifest in Section K of the RMAR.

  4. This industry is being regulated out of existence.

    Julian’s comments are totally correct. As a result of the FCA micro-management the networks are running scared and imposing unbelievably rigid and tortuous restrictions making the ability to write and apply new business almost impossible.

    The fees are higher, the FSCS is advertising for new business, MAS is eating away vast tranches of OPM and the FCA/FSA has removed basic human rights from advisers whereby the consumer is presumed right unless you can categorically show otherwise.

    Totalitarian in practice with the smooth grinning face of officialdom adorning all the death warrants.

  5. Incompetent regulators 12th September 2013 at 10:11 am

    Thanks for stating the obvious Neil. What we need is de-regulation. The current system is for the benefit of the regulators and not the consumer. All advisers now meet regulatory requirements and not consumer requirements.

  6. they do not earn their money and they are not “worth it”

  7. Don’t often agree with Neil but this time he’s got it right on the money.

    There seems to me a singular lack of reality in the FCA. Example…completing Section K last month we had a query re maximum charges. We want to put “depends on the complexity of the case”. FCA asked use to, and I quote, “give it you best guess as to your average maximum charge” – accuracy is obviously at the core of their business monitoring process – aye, right

  8. It’s a bit like being down the pub here Sam Caunt always has an opinion there also. ;>)

  9. Bang on the money Neil. You speak a lot of sense and I’m sure that the vast majority of IFAs agree with an awful lot of what you say.

  10. I just wondered if anybody has had any phone calls from providers asking for reasons why you charged x amount on a product implementation when no percentage was charged.

    The reason why I ask this question is that I had Legal & General phone up yesterday asking this precise question under an FCA questionnaire.

    Not that I had any problem with answering the question but I am very suspicious of this type of survey as I suspect that the FCA is going to come up with something new on charges fairly soon.

    A space to watch methinks.

  11. Barney Cumpot | 12 Sep 2013 9:45 am

    I read your comments with interest. I too work within a network and like our network generally. However they are creating that much overload that it is impossible to write business and we are being harassed to death with micro managing our business. (you know its bad when your client actually laugh at some of the addendum letter you send because the network feel its necessary!).

    They have created a regulated industry within a regulated industry and dictate what we can/cannot do as you would an employee!. A recent meeting with 2 directly regulated advisory firm our size were agog at the crazy demands from our network. It would actually be funny if the consequences were not so serious.They had less hassle from the FCA it seems who it turned out to be quite helpful – yes I did say that.

    Interestingly a major pension provider at that same meeting pointed out that they had recently reassessed their attitude to networks as the feedback from network IFAs across the UK was all negative. Hence they are planning for a rush to directly authorised. Right now I fail to see how the networks can survive unless they get back to basics, realise who works for who and stop micro managing our business.

  12. The FSA / FCA and whomever comes next can certainly determine how payment is made, what constitutes suitable advice and regulate behaviour, but, until such time as the UK officially reverts from a free market capitalist society into some Marxist hell hole, they have no business making comment on how much anyone charges for their time, advice and service. Free markets and the prinicple of supply and demand will regulate the level of fees charged and for what they are chargeable.

  13. @ Greg ~ which is why the networks are losing members hand over fist. Some say this is because of intense and unrelenting interference from the regulator. Others say that it’s because they (the networks) receive no help from the regulator as to how to interpret its guidance papers (what a joke). So they give it their best shot, show it to the regulator, the regulator says No we don’t like that, the network asks why, the regulator says We aren’t going to tell you, just go away and do it again. Bastards.

    So the network tries again and again until it manages to produce something of which the regulator doesn’t disapprove but, in so doing, it’s tied itself up in such a straitjacket of compliance requirements that it then has to be seen to impose on its members in respect of every damned thing they try to do that it effectively alienates them all and they leave.

    Meanwhile back at Canary Wharf……..

  14. When he said he expected charges to change, I dont remember any mention of him believing they should be reducing. I think he meant that advisers should now be charging based on the service offered and simply keeping the old model figures for every piece of business does not demonstrate this is happening.

  15. If we’re to believe what the dementors of Canary Wharf keep saying, all this regulation and its associated costs are absolutely necessary because the reputation of the industry is in such tatters. The fact that, of just about any sector of it [the industry], IFA’s have contributed least to the damage done to its reputation has, unfortunately, completely escaped the regulators.

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