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Sants says simplified advice will be vital

Hector Sants
Sants: ’Vitally important that a credible simplified advice service exists alongside the full advice offering’

FSA chief executive Hector Sants has stressed the importance of simplified advice services after the RDR and revealed plans to consult on simplified advice later this year.

Speaking at a British Bankers’ Association conference in London last week, Sants said the regulator realises the RDR means significant change for the industry, but believes it will lead to an improved market in the long term.

He said: “We do recognise that, while not specifically an issue which the RDR seeks to address, in order to ensure the financial marketplace is fully effective for investors, it is vitally important that a credible simplified advice serv- ice exists alongside the full advice offering.

“Ultimately, it is for firms to introduce such services but we are currently working with them and later in the year we plan to publish more detail on the regulatory framework.”

BBA chief executive Angela Knight wrote to Sants last month, arguing that a simplified advice model is needed to meet the requirements of the mass market consumers after the RDR.

The BBA and the Association of British Insurers have been working to develop a simplified advice process but Money Marketing understands the FSA has been dismissive of the models put forward so far.

The ABI welcomes the plans to consult on simplified advice guidance. Assistant director of consumers and distribution Peter Jolly says the ABI’s guiding principles for simplified advice, launched at its conference in May last year, should form the basis of the FSA’s guidance.

He says: “We hope we can now move forward quickly and develop the regulatory certainty necessary so that such services can be developed ahead of the RDR reforms being implemented.”

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  1. Weren’t stakeholder pensions and CAT standard ISA’s supposed to be products so cheap and so simple that the powers which created them believed that they’d be bought instead of having to be sold? As we know, they didn’t sell, at least not in any worthwhile numbers, whilst nobody was prepared to try to sell them because they’d had any margin for the cost of advice beaten out of them.

    If we fail to learn from the mistakes of the past, those mistakes are bound to be repeated in the future. History, economics and the realities of the world of commerce are obviously not subjects studied by anyone at the FSA or, if they were, then whatever was learned has now been forgotten or cast aside in the relentless pursuit of a perfect world in which advice is provided for peanuts and products are all but guaranteed never to cause anyone any loss.

    So what do we have now? The worst savings gap in a generation, which the FSA has convinced itself, if nobody else, will be addressed by the sledgehammer fix of the RDR. A better problem to prioritise would surely be unsecured borrowing so that ordinary people might at least have a bit of disposable income to set aside for the future. But what do I know? I’m just an adviser who actually deals with people face to face as opposed to some armchair theorist comfortably ensconced in an ivory tower on a nice fat salary funded by other people. The term for that, I believe, is a sinecure.

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