We are now four months into the RDR and the FCA and politicians seem to be confused about the new rules. We have MAS chief executive Caroline Rookes stating that she would like to grow partnerships with banks and building societies to bridge the advice gap.
This seems to be at odds with the MAS’s own advertising which says it gives unbiased advice, surely that means independent advice?
This decision looks even stranger when you consider the past record of banks and building societies.
Instead of serving the general public well, they have repeatedly proven that they are incapable of providing mass advice. After all, are they not the ones who are paying massive amounts of compensation for miss selling and left the industry with a terrible reputation. Therefore, the decision of Caroline Rookes to form partnerships with Banks and Building Societies is frankly strange
We should not forget that the FCA has a statutory objective to enhance the integrity of UK financial system.
I will not list the miss selling scandals of banks as they are too numerous but I think we have to consider whether this is a wise move on behalf the FCA and MAS.
Now as an IFA, I obviously have a vested interest in wanting the FCA and MAS to promote IFA’s, but surely this is also part of the FCA’s statutory requirement?
Doesn’t the FCA have a statutory objective to protect consumers?
How can the FCA protect consumers when it continues to allow and look for ways to allow unauthorised advice within financial services?
There seems to be a debate forming within financial services about what is “advice” and this is such an important subject for the IFA community. If we continue to allow the FCA and MAS to erode the legislation that underpins financial services we will not have an industry left.
I am so concerned about the continual erosion of basic principles within financial services I hope one of the trade organisations would consider taking our own regulator to court to enforce the principal of advice given by registered professionals.
The RDR was meant to make advisers more qualified to give consumers the confidence that they are speaking to a highly trained professional. Unless the regulator enforces basic authorisation regulations, there is no point in having higher standards within financial services.
We may be highly trained individuals who know what is regulated and unregulated advice that the consumer has no idea. The average person on the street does not understand the term regulated or unregulated advice.
They don’t even understand the difference between information only and advice so surely it is time for the regulator to do what its statutory power states it should and that is to protect the consumer.
The Money Advice Service is giving a confusing message particularly if it starts referring clients to banks for what the consumer considers to be unbiased advice. When you say that aloud it really does sound like a joke – a bank giving unbiased advice.
If the MAS is to survive, then it needs to start building links with IFAs. There may be only 20,000 of us left in the country but the regulator needs to start looking at the advice industry as individual practices, rather than big conglomerates that are only there to maximise their profit and don’t have client interest at heart.
When you link these two statutory objectives together e.g. protect the consumer and enhance integrity of UK financial system, I would have thought that dealing with smaller organisations over the whole of the country would give rise to fewer misselling scandals and give the client more choice. There is a saying and it is oh so true in the world financial services and that is big is not always beautiful.
Peter Herd is managing director of Essential IFA