This decision would be astounding, were it not made by the same team that failed to regulate the banking industry responsibly.
In the end, it seems the FSA executives felt their reputations depended on it and that to rescind from such an expensively created position was simply career suicide.
You have already set out, thank goodness, to fix the broken regulatory system Labour created when they built their super regulator.
Having been regulated since 1987, I can testify that the FSA is the most spendthrift and least able master we have seen since 1987 and while their failures in the macroeconomic sphere will trouble you most, please spare a moment’s decision making for the retail consumer of financial advice. While a simplified product range and the Consumer Financial Education Board might well help in the long term, people will still need advice if they are to make proper personal financial provision.
And if they are to take advice, then every release of Financial Ombudsman Service statistics shows the IFA’s track record in providing this fairly to be simply miles better than that of the banks or other big corporate alternatives.
The Barclays protesters are the latest to demonstrate the folly of building a system that encourages large corporations to provide financial advice to ordinary people.
The UK consumer is far, far better off with someone advising them who seeks primarily to profit by maintaining the client adviser relationship. And for this proven model to continue to exist at scale in the mass market a thriving IFA sector is a requirement.
The single biggest threat to any IFA’s future, and particularly those seeking to serve the wider market, is the RDR. The FSA accepts it will cut numbers by 20 per cent but it is certain to cause a far greater cull. It will accelerate the already consistent decline in consumer access to decent advice.
While any industry as diverse as UK retail financial services is easy to divide and rule, the many voices who have tried and failed to stop or prune this regulatory juggernaut include all the leaders of major IFA firms or networks – the very distributors of financial advice that consumers are pretty much starved of.
Such leaders were listened to but ignored by a Blairite FSA team determined to achieve the grand project rather than grub around with individual issues.
Clearly, with such a multi-faceted and all embracing reform there are many elements worth saving but the overall focus on creating theoretical perfection no matter the cost is needlessly ruinous and will most certainly leave consumers in the hands of the major corporates.
Happily, your Government has no political capital to lose in requiring the new Consumer Protection and Markets Authority to think the RDR through again, so please take this last chance to place a Conservative stamp on the future of financial advice.
And may I add a last caution? The people at CPMA you would charge with the review of the RDR are mostly the same ones who decided to press on regardless last time. Watch them closely!
Tom Baigrie, managing director, Lifesearch