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Sants: People will not be excluded from advice under RDR

FSA chief executive Hector Sants says the regulator is keen to ensure the RDR does not prevent people from getting financial advice.

Sants (pictured) was questioned about the RDR’s impact on access to advice following a speech he gave at the Association of British Insurers’ biennial conference in London yesterday.

RGA product development actuary Greg Becker asked: “I support the RDR but can see an unintended consequence being that large sectors of the population stop being serviced by traditional IFAs. What is being done to ensure these people will have access to some form of advice or guidance, other than the work being done by the Money Advice Service and its financial health check?”

Sants replied he was glad to see support for the RDR’s core objective of creating a better financial services market.

He said: “As we have been designing the RDR process and our interventions in that area to develop a better marketplace we are very conscious of the point the question has raised, which is that we want to make sure we have not excluded people from advice that they were previously able to get.

“A key element of making sure that does not happen is the delivery of an effective simplified advice regime.”

Sants added the development of simplified advice should be a joint partnership between the regulator and the industry.

He said: “We have recently recognised that in order to play our full part in this partnership of delivering effective simplified advice that more help and more clarity from the regulatory perspective would be useful.

“We will be publishing further documents on how we see simplified advice working in the next few months, and I very much hope that will address those utterly understandable concerns.”


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There are 36 comments at the moment, we would love to hear your opinion too.

  1. Does anyone actually care anymore? The overall dullness rating of RDR is huge. The fact is that from 2013 onwards the new world will appear and then we’ll see who was right. Virtually every firm we talk to are focussing on higher net worth clients and expect their less flush clients to drift away, or be actively segregated (got rid of). There is a growing acceptance that RDR is only survivable by that strategy which also seems to be the conclusion some banks are coming to. Personally I can’t wait for the MAS misselling horror stories to begin, garnished by the train wreck that is NEST. Provided that the blame isn’t somehow directed onto the few remaining IFAs that is……

  2. I agree. The trend is for those who are remaining in “Advice” to concentrate on HNW clients. For everyone else they will find “compare the market” -style services are all that can be afforded. Clearly most of the population will not base this on sensible, considered decisions but on “promised” returns or gimmicky promotions.

    I have a bright idea…make Diploma level financial qualifications compulsory for the entire population and then they will be able to safely use the execution only services that they can afford!

  3. It’s not just the RDR – overburdening regulation, regulatory and PI costs and risk to me forever in an increasingly litigious society mean that the cost of advice has gone up exponentially in recent years. I quoted a fee last week to set up a very small GPP, company didn’t like the fee (neither did I really but when I itemised the costs it was correct and fair). The result is they will not set up the scheme now and will wait for NEST which will, for them and the employees, mean maybe 5 years ‘lost’ pension planning. Typical employee was 21 yrs old with £1500 pa going in, about £7500 and five years ‘lost’. FSA ‘looking at’ simplified advice – been here before methinks and it’s too late for hundreds of thousands of people anyway. RDR will just make the situation worse.

  4. re anonymous 8.35, I agree with the whole dullness rating of the RDR and its high handed aims. Why not give the consumer the CHOICE fees OR commission OR combination. The IFA will still be qualified.
    I was talking to an ex IFA last week that has left the industry and is now advising and selling renewable energy products and can’t believe how the stress has gone and the income inproved. Yes there are brighter things after RDR…another industry

  5. Jeremy Newbegin 23rd June 2011 at 9:12 am

    With the greatest of respect to Hector Sants what he does not understand is that people, especially the poor and lower middle classes, need to be cajoled into financial planning action. To assume that people will go to a website to implement their financial needs is to not understand our industry.

    It is one thing to ensure that the advice given is good it is another to get quality advice out to those that need it. RDR will cater for the well off and those not so well off but intelligent enough to know that they need to put together a comprehensive financial plan, but it will ignore the rest.

    My limited brain thinks that the well off actually need little financial help but the poor need every possible assistance. Face to face meetings always generate more action than any other substitute. Less advisers in the market place will, as has already been mentioned, push all IFA’s into the HNE’s leaving the rest with an at best second class advisory method.

    I hope I am wrong. We will find out after 2013.

  6. So let me get this straight. The “solution” to making sure people will still get advice post RDR is “simplified advice”. Simplified advice will presumably be LESS “good” than independent (or even restricted) advice from more highly qualified advisers.
    And the reason for RDR was apparently the lack of public confidence in adviser competence, and the specific consumer detriment caused by advice being given by less qualified advisers. So simplified advice appears to simply be an exact repeat of what supposedly caused the problem RDR was meant to solve.
    Brilliant. I am now reassured that all is well.

  7. Tim Harrop-Griffiths 23rd June 2011 at 9:18 am

    I can’t wait to see how Hector and his band of merry men believe simplified advice will work. Sants and his like live in a little vacuum where salaries of £100k plus are the norm and therefore paying a fee for advice is an option. Hector, in the real world things are slightly different old boy!

  8. Pick me up off the floor Hector, I cant stop laughing (or is that crying ?)

    Do you really believe this ?

    Will you fall on your sword if you (RDR) are wrong ? That would be the moral and principled thing to do wouldnt it !! After all, the buck stops with you surely ?

  9. Oh Boy, have you got a surprise coming your way Mr Sants…..

  10. proves he has no idea what ifas do for clients or what they want or afford or how best we are remunerated!
    Does anyone think that the advert put out by the Money Advice Service should be reported to the Advertising Standards Agency as misleading because it does not give advice?

  11. If Sants is wondering how the great majority of people will get their financial advice after the next great hike in adviser costs takes place in 2013 then perhaps their is a glimmer of hope.
    But, I doubt it.
    Sants and the cretins at the FSA are so far removed from the reality of life in the wider world outside his own economic elite he can’t see that the vast majority of families cannot afford to sustain the costs we have to pass on them.
    A simplified regime perhaps, but if idiots like Sants are designing and regulating it, it will still be to complex and expensive for most people.

  12. You would think that he would construct rather than deconstruct Financial Services for his £804,000 salary.

  13. As we all know Sants lves in different world. He probably gets advice at no charge He has the top advisers at his beck and call so has no need to think about the people who will not be able to pay for advice. I set up a small GPPP for a new company and they wanted me to take commission as they did not want fees showing as they were start up How many more will there be who will not pay a fee so will wait for Nest

  14. I’m not excluded from purchasing a helicopter – except for the tiny, wee, insignificant matter that I have no money. To compensate, maybe I should instead take a parachute jump.
    Nuff said!

  15. I write this in the hope that Mr Sants is reading asmy comments are directly aimed at him.

    Mr Sants what world do you live in? You comments and ideas have no baring AT ALL on the real world. You ran a failed organisiation and now you are to be in charge of the new organinstion doing the same thing, you are a very lucky or a very influential man.

    Many, many IFA’s will not be so lucky most of them running successful, proiftable and honest companies because of a regime that you and your organisation feel is the right way to go without any of you ever being in this industry, and you could hardly call yourselves consumers, because you are likely to be the HNW clients that will be the only ones with a route to independant advice in the future.

    Please stop pretending that is for the benefit of the comsumer or are you all really that distant from reality that you dont know any better.

    My firm will be ready for RDR becasue we HAVE to, my clients won’t and many of them will be the real casualties and hopefully they will have the critical mass to stop you as us few IFA’s seem not to.

  16. Of course mr & mrs joe public will pick up the phone and call the new MAS in their thousands because IFAs have now said no more freebies for the “poor|”. What planet is Sants on, you need IFAs to preach the message and convert those who need to be pushed. Sants knows he has made a giant sized boo boo with RDR as it is, and for NEST i really can’t wait for the stuff to hit the fan…

  17. Well done Hector, you are NOW going to look at how our disenfranchised clients can get advice once we start our RDR compliant charging structure. Just watch the Banks put together a simplified sales process to pick up the slack. Or revisit the Panorama programme to see what it will look like. ” I have been doing this for a long time and can see you need one of these, just sign here and call the next mug in on your way out”.

  18. Lets lock everyone up in jail until they can prove themselves of being innocent of something. I am sure that is what the FSA would like this to happen!

  19. Glenn van der Kamp 23rd June 2011 at 9:57 am

    Mr Sants and his executive team clearly have no idea what the majority of consumers feel. Already there is undisputed evidence of IFA’s focusing soley on the higher net worth client to the detriment of existing Joe Public clients.
    In even the short term, this will mean more State reliance and higher taxes for everyone to pay for it.
    How short sighted is this – Perhpas a mandatory visit to Specsavers for all FSA staff is in order !

  20. Anthony Walker 23rd June 2011 at 9:58 am

    The guy is living in cloud cuckoo land the average man in the street will notb e getting the advice .He will not have a proper pension provision.He will not be properly insured and therefore it will fall to the state to bail him out like the goverment bailed the banks out

    People do not buy pensions and insurance they are sold it

  21. I have come to realise I am in “who really cares anymore” camp, I am just fed up with this dullard Sants.

    Fact is I can’t/won’t deal with people now who cant pay or revenue is limited, in reality that means nearly 80% of clients I have dealt with over the past 5 years will not get any advice from my company.

    So I suppose those people will have to go to MAS or similar.

  22. As Basil would say like he did to Manuel “Hector you know nothing”, “but I learn Mr Fawlty”. “No Hector you never will”.

  23. we want to make sure we have not excluded people from advice that they were previously able to get.

    No Kidding! That is exactly what you have done Mr Sants.
    Any simplified advice will not be the advice they were in your words “previously able to get”

  24. The guy is insane and has no idea. The commission earned on my welthy clients has by default ended up subsidising the advice to all those on low and middle incomes. Sorry but if I am to have to start charging my clients fee’s, then I will not be advising low to middle income people who cannt afford to pay £60-£100 per hour.

    Not unless my wealthy clients are happy for me to put a surchanrge on their bill to cover all the dreamers and timewasters as well as those to poor to pay for my services.

  25. Gary, I doubt you’ll make a living on £100 an hour unless you are a sole practitioner with no office and no staff.

  26. Voice of the Voyager 23rd June 2011 at 4:00 pm

    There seems to be a ‘movement’ now within the press that perhaps RDR is not doing what it is supposed to do – i.e. weed out the ‘commission hungry salesman’ as they always put it – but is starting to show Joe Public is being abandoned. Anyone wishing to put a bet on before ‘son of RDR’ is brought to the fore? Or will the industry be too dead to recover from?

  27. I think this is an aspiration based on hope rather than economics. It simply isn’t feasible to continually drive up the costs in any industry or profession and expect a more expansive and cheaper offering from that same profession.

    We find that clients will pay fees – we only act for those that will. Those that won’t do not get advice from us. Our fees will have to go up as external costs go up, that is just what happens.

    We do some pro-bono work which is genuinely free but it is only guidance and not advice. The financial landscape is becoming more complex, not less and it is doifficult to see how a simplified advice regime will work.

    Unless for advice one really means sales and for simplified it means generally unregulated in the way mass product distribution is currently delivered by 4 or 5 high street institutions.

  28. I met a fee charging IFA who was asked for advice on a £5,000 investment. He charged £1,000 to cover his time, expertise, overheads etc. and advised the client to put the remaining £4,000 in a cash ISA!

    Welcome to the RDR world from 2013 Mr Sants! For your legacy I applaud you!

  29. Earth calling Hector! Which planet are you on?
    Thank you in advance for destroying the industry, many IFAs livelihoods, marriages, childrens’ futures etc. etc. If you were a senior director in a plc you’d have been fired for gross stupidity years ago! It’s not to late to listen to some common sense and make changes.

  30. Be careful what you say Mr Sants. Your words prove that you don”t understand RDR and don’t care what happens to clients and IFAs just so long as your (bank) paymasters are OK. Even they are starting to get worried though!

  31. Peter Smith told us that the FSA does not have a Plan B. Actually, it doesn’t have a Plan A either and is piecing together various hotch-potch philosophies and ideas and hoping that in combination they form some kind of strategy.

    As an unaccountable body it couldn’t really care less because come what may the salaries will continue and the responsibility will be deflected.

    It’s Callum’s fault, goes the shout.

  32. 2.7 Million Orphan clients will be prevented from getting financial advice!

    On the 9th of March 2011 Sants told the TSC that between 25-30% of adviser will leave the industry.

    Oxera reveals that a quarter of IFA firms will close before 2012, the vast majority (23% of the IFA market) directly due to RDR.

    AVIVA Life marketing director David Barral has said the firm predicts by 2013 IFA numbers will fall to 10,000 in total as advisers fail to comply with RDR changes, leaving middle-market consumers unserviced. No surprise then that Aviva wants to grow its tied in-house channel to target 2.7 million ‘orphan’ clients whom were originally IFA clients. So much for consumer choice!

    Perhaps Sants thinks 2.7 million orphan client will get advice from the FSA MAS website?

    “A lie told often enough becomes truth.”

    Lenin and Sants

    “A lie refuted often enough remains a lie.”

    Simon Mansell

  33. Great swathes of people in society’s moderate to low economic bracket WILL be excluded from advice because IFA’s will simply be unable to provide what they require at a price they can afford. I can’t even get people to pay a nominal £80 for me to spend an hour putting together for them ~ and explaining ~ a range of options for life insurance.

    As the costs of regulation go endlessly up (largely due to the insatiable appetite of the Canary Wharf leviathan for other peoples’ money), as the costs of PII go endlessly up (as a result of the FSA’s perennial practice of regulating by hindsight), as the costs of everything else go up (with inflation running at more than 5% p.a.), as the costs of all these exams and study programmes continue to eat into our time and profitability, as the costs of employing people go up and up (due to increased NIC), how can it be any other way? How can you not see this Mr Sants? How can you have the brass to continue spouting these vacuous platitudes? What is the point of a perfect advisory sector if at least half the population can’t afford its services? Crazy.

  34. Let again we hear the lament, “unintended consequences”.

    Many of us have been hollering for three years and upwards that this will happen. In fact, we have made sufficient noise that any continuation of the RDR will prove that the consequences are very much intended.

    Educated and otherwise sensible consumers fail to take the necessary financial steps due to apathy or some other compulsion. This is well known and not in doubt. It therefore goes that these same consumers will not willingly engage with the MAS or any other form of advice/education.

    We can never reach all of these people and such a goal would be unreasonable but we can get a good percentage to consider their inactions if IFAs are enabled to interact with them without the negativity associated with a fee discussion.

    Hector, Callum is long gone and intent on making an additional fortune in the mortgage market, the RDR catastrophe will be at your door. Like Nero you will be remembered for this alone – what an epitaph.

  35. Michael Fallas 24th June 2011 at 7:33 pm

    What a shame Mr Sants is not responsible for his decisions for the rest of his life, as he expects us to be.
    What a shame our MP’s are not responsible for all the acts of Parliament, laws and regulations they force upon us for the rest of their lives, as we are for our advice.
    What a shame we are being forced to pay for a “free” advice service unlike solicitors, accountants, doctors and surveyors etc.

  36. Has anyone heard that the UK and the whole world are dealing with a major debt crisis- one of the biggest this century!! . HNW, and pretty well all people are currently finding ways to reduce their debts and stabilize their cash-flow. Inflation is already creeping up and we have yet to see the impact of rising interest rates, besides increasing redundancy and cost cutting in the work-place.

    Oh! I see we are paying for financial advice now, says the client as he/ she reviews his expenditure items. WELL- THAT CAN BE CHOPPED FOR A START!!!! This is the real world.

    Incidentally, many clients will being paying consultancy fees for STRESS RELATED ILLNESSES as I am for my family. An old fashioned IFA would have have provided advice and guidance on such matters. Yes its the intangible benefits of an IFA which cannot be measured in Fees which clients used to get and which will now disappear. These people haven’t got a clue.

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