View more on these topics

Nick Bamford: My awkward questions for national advice network supporters

Nick Bamford MM 700

Most of us who have been in the financial services sector for any number of years are familiar with “the law of unintended consequences”.

In the endeavour to make the world a better place often what happens is that the outcome is the opposite of what was intended. Teresa Fritz, a member of the Financial Services Consumer Panel, has called for regulatory fines to be applied to fund a national advice network to help bridge the post-RDR advice gap.

She argues that funding such a network from FCA fines could build a quality guidance service potentially as an additional layer of the Money Advice Service. It does not take a genius to see what unintended consequence has emerged here.

The advice gap is described as “post-RDR” so I think it is safe to conclude that Fritz understands that the problem has been caused by the RDR. What element of the RDR caused the gap to emerge? With an ever increasing costs base, partly related to increasing regulatory costs, quality impartial and independent advice has been priced out of the range of good number of people.

So having created the advice gap problem (wasn’t this noticed during the RDR consultation phase and if not why not?) we now have to come up with a solution. I have more questions than answers as far as Fritz’s suggestion is concerned such as;

  • What does she specifically think caused the advice gap? (Can someone from the regulator help her with that answer?)
  • If the advice gap is to be funded by FCA fines won’t that incentivise the FCA to fine more firms?
  • Shouldn’t such a service be funded by the taxpayer?
  • With the MAS already demonstrating it isn’t fit for purpose, does it make any sense to add “layers” to it? (Doesn’t the adage “never reinforce defeat” ring true here?)
  • Isn’t there already in place a perfectly good distribution of advice system (they are called independent financial advisers)?
  • Why can’t the FCA fines be recycled back to IFAs to pay them to deliver the advice?
  • Why does Fritz think the focus should be on “getting people to the point where they understand what products they have to buy”?
  • Isn’t that sort of guidance exactly what the MAS was meant (but has failed) to be doing?
  • If the adviser who receives the referred client has less work to do can she tell us exactly what “even less work to do” (cheeky comment from her by the way because I seriously doubt she has a clue what work an adviser has to do!) means?
  • If the new “layer” gets the client to the point where they understand “what product they need to buy” pray tell why they need an adviser?
  • Will the new “layer” take regulatory responsibility for the advice or will that remain with the adviser? (if the latter price won’t be driven down much)

In our firm we often come up with innovative new ideas. Very often they don’t progress to any kind of active business service, but the work involved in developing them is disruptive. I think Ms Fritz has just entered the world of “disruptive innovation”.

Nick Bamford is executive director at Informed Choice



Mark Carney: No interest rate hike on the horizon

Bank of England governor Mark Carney has indicated an interest rate rise is not on the horizon despite unemployment hovering around the 7 per cent threshold at which the monetary policy committee may consider hiking rates. Speaking to the BBC’s Newsnight programme, Carney said the MPC looks at “overall conditions in the whole labour market”, […]


Alistair Cunningham: Network woes present huge opportunity

Networks and nationals are struggling, with no apparent end to the suffering. Record fines, management team departures, falling adviser numbers and a furious backlash against the inevitable conversion to a restricted advice model summarises a horrendous 2013. In the historic environment of the “solutions led” adviser, networks once offered valuable services, particularly their ability to […]

What triggers the MPAA?

Jim Grant – Senior Product Insight & Technical Support Analyst There’s sometimes confusion around what triggers the money purchase annual allowance. Find out what does and what doesn’t trigger the MPAA. The money purchase annual allowance (MPAA) is a reduced annual allowance that can apply to contributions to defined contribution (DC) schemes. The following table […]


News and expert analysis straight to your inbox

Sign up


There are 2 comments at the moment, we would love to hear your opinion too.

  1. Abacus test comment please ignore

  2. Abacus test 31/1

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm