Behind closed doors I’m sure the FSA readily admits that, whatever its intentions, it made a spectacular PR own goal in embargoing a comment rejecting the Treasury select committee’s key recommendation so that it could be published alongside the TSC report.
From a PR perspective the regulator was attempting to kill the story – it was hoping that all the media coverage would lead with the FSA’s rejection of the call for a delay rather than the call for a delay itself.
Instead, the FSA has enraged MPs who feel they have suffered from the same kind of antics that many IFAs complained about in their evidence to the committee.
The swift rejection gives the impression of a regulator unwilling to take onboard the balanced proposals of the backbench committee. This is not the same McFall-led TSC which too often failed to hold the previous Government and the FSA to account and only late in the day showed any real teeth.
Since the general election and the MPs’ expenses scandal the mood on the backbenches across all the parties has changed. Andrew Tyrie is already proving a worthy chair of this powerful committee and many of its members, especially the 2010 intake, are far more likely to question authority than their predecessors.
The strength of the MPs’ feelings over the FSA rejection was made clear in the angry comments on the front page of last week’s Money Marketing and then in a letter from TSC chairman Andrew Tyrie to FSA chief executive Hector Sants expressing his dissatisfaction with the FSA’s behaviour.
In his letter Sants said the FSA would soon be publishing guidelines for eligibility for waivers from the RDR as well as looking at whether “further mitigating actions” were required to support advisers who are doing their best to reach the new requirements.
Whether this is the start of a loosening of the FSA’s dogmatic stance on the RDR or simply Sants paying lip service to the committee we do not yet know.
The FSA says any RDR “waivers” would be on a case-by-case basis with advisers having to submit a thorough case for why they should be allowed an extension, rather than a general waiver for a certain demographic.
Observing the FSA’s quick-fire rejection of the TSC’s key RDR recommendation, Cicero Consulting director Iain Anderson described the manoeuvre as a “robust starting point” for negotiations between the regulator and the FSA.
The letter exchange between Tyrie and Sants has certainly moved on these negotiations but there could be some more horse-trading to come as MPs and the regulator attempt to create a consensual view. (Don’t be surprised if Sants is hauled in front of the TSC again in the Autumn to explain the FSA’s full response to the TSC’s report).
So, is there an RDR compromise that would be acceptable for both sides?
A few years ago the Personal Finance Society floated the idea of allowing older advisers to remain in the industry for a set period after the RDR is introduced, with a sunset clause agreement meaning they would then leave the industry after this date. Under such agreement the advisers could expect heavier regulatory scrutiny and perhaps increased supervision from their network or other advisers at the firm. The idea fell by the way side but it would be interesting to hear advisers’ views on whether such a plan should be revisited.
Adviser feedback and our online straw poll show the industry is split on whether a one year delay should be introduced with a significant minority of advisers unhappy about other firms benefiting from the extension when they have gone to the trouble of getting the required qualifications within the original timeframe. The FSA warns a one-year delay will lead to momentum being lost.
If the FSA was to introduce specific regulatory dividends, such as lower fees for advisers who reach the 2013 deadline, alongside a one year extension, would more people support the delay and would this allay the FSA’s momentum fears?
After last week’s fireworks it is probably time to focus on finding common ground. Let’s hope the FSA does indeed take time to consider the MPs’ report in full and is prepared to look at “mitigating actions” to help with the RDR’s transitional arrangements to give the reforms the best chance of being a long-term success for advisers and their clients.
Paul McMillan is the editor of Money Marketing- follow him on twitter here