Monday night’s Parliamentary RDR debate was an extraordinary affair.
To see around 80 MPs hang around late into a cold November night to listen or contribute to the debate, with no Party whipping or vote, put paid to those who have been suggesting political concerns about the RDR where emanating from a tiny number of renegade backbenchers.
Throughout the 30 or so contributions to the debate there was a near universal consensus from across the political spectrum about the dangers of certain aspects of the review.
Of course some of the contributions were a little light on knowledge- details on the new charging structures were sometimes muddled, some of the claims a little outlandish and a few MPs appeared to be simply reading off a script they had never seen before.
But there were also a number of impressive contributions – I would highlight Labour’s Michael McCann, Tory MP Sharon Wheeler and Labour Shadow Treasury minister Christopher Leslie alongside some of the usual suspects.
Leslie’s contribution was particularly significant suggesting a change in tack from the Labour Party which has showed little interest in the RDR over the last few years. Of course, some may speculate this Damascan conversion is more to do with political opportunism than a genuine worry about consumer access to advice.
But I did not get that impression from listening to Leslie’s speech. He agreed with the need to move to a more transparent charging structure and also higher qualifications for new entrants. But he also suggested that what he described as Labour’s “pro-consumerism” be extended to concern about the effect of a significant number of IFAs leaving the market and showed support for some kind of grandfathering solution.
Leslie suggested possible amendments to the upcoming parliamentary bill around the restructure of financial services regulation, even if they simply act as a symbolic gesture of MPs’ concern. This could leave some vocal Conservative backbenchers in an awkward position of having to decide whether to vote against the Government.
The RDR has snowballed as a political issue since Conservative MP Mark Garnier first gave an interview to Money Marketing in October. Many people were far too quick to dismiss the concerns of backbenchers, particularly underestimating the hunger of the new intake of MPs to act independently of their party and, especially since the expenses scandal, show they are doing a useful job in representing their constituents.
It is very easy for lobbyists, company spokespeople, trade bodies, media IFAs and journalists to get caught up in our own little bubble. Many people you are speaking to have been enveloped in a cosy consensus around the need for reform at all costs. The agenda behind this can stretch from a passionate belief in the need for reform for the right reasons to deeply self-interested motives and also includes many who are simply bored of talking, lobbying or writing about something that has been going on for a few years and now just want the FSA to get on with it.
MPs do not have the luxury of living in such a bubble and neither do many of their IFA constituents who are either concerned about reaching the new requirements themselves or concerned about the dangers to society of a significant number of IFAs leaving the industry.
Hundreds of IFAs have lobbied their MPs to express their concerns about the RDR. Of course MPs getting lobbied about every issue under the sun but the plight of IFAs has hit a certain nerve.
In many cases the IFAs that have been raising concerns about the RDR to their local MPs are important pillars of their community and may be personally known to the MP. They are far from political agitators and rarely complain without good reason. Therefore, when they raise concerns, MPs sit up and listen.
The momentum has also been helped by many advisers who already have the required qualifications and business models also lobbying their MPs to share their worries on the RDR.
It is nonsense to suggest that such a groundswell of political concern has no chance of influencing proceedings.
It would be folly for IFAs to down their examination books and business transformation blueprints and think the RDR will go away. It will not.
As Mark Garnier said in his address to Parliament, the agenda of MPs is not to derail the RDR or turn the clock back on the move to greater professionalism and charging transparency.
But an important consensus seems to be developing around the need to ensure as much as possible can be done to stop a large number of IFAs leaving the industry.
Senior management at the FSA will have been taking careful note of the growing political interest in RDR. I would suggest the issue of consumer access to advice is something that is also troubling many within the regulator, especially as any plans for simplified advice seem to have evaporated.
The powerful Treasury select committee is also likely to apply pressure through its consultation on the RDR. A number of committee members from across the benches raised their RDR concerns during the debate, with chairman Andrew Tyrie listening carefully and raising personal concerns about consumer costs rising.
In responding to MPs, Hoban’s speech was far less antagonistic than the one he gave at the recent Westminster Hall debate. Whilst suggesting it was right the FSA “gets on with its job” he also said it should listen to the issues raised. His message was far stronger when talking about the remuneration reforms and overall increases in professionalism than on grandfathering and the plight of existing advisers worried about the deadlines.
Heavy pressure from Parliament is almost certainly not going to make the RDR disappear. But it is quite possible a growing political consensus helps guide the regulator to look again at the current cliff edge deadlines and introduce a greater degree of pragmatism to its policies to ensure the interests of consumers are definitely being served.
Paul McMillan is editor of Money Marketing – follow him on twitter here