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‘Primary advice puts consumers at risk’

Consumer advocate Mick McAteer has blasted the RDR for “completely missing the point” by failing to understand consumer needs and playing into providers’ hands.

McAteer also warned that “second-class” primary advice could damage generic advice.

Speaking at Osney Media’s financial services distribution summit in London this week, McAteer said the RDR will cause more confusion in a marketplace that is already confused following depolarisation and that there are too many categories of adviser.

He said: “It fails to tackle conflicts of interest in the non-IFA channels. It is naive to expect non-IFA channels to move away from commission. This is not a level playing field and will reduce the competitive pressure the IFA has on the market.

“Primary advice is an artificial construct not designed with consumers in mind. It will be seen as second-class regulation and counter-productive to consumer risk. It may undermine plans for the generic advice service and make it more difficult for ordinary consumers to access advice.

“There are simply too many conflicts of interest and the consumer interest has been subordinated by the providers. We must cut the cost of regulation to promote financial inclusion.

“The RDR misses the point. Advisers cannot be called independent unless they are sourcing products from the whole of the market. They should not be called independent if they use commission. It is sleight of hand to call commission fee-based.”

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