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Scottish Widows concerned RDR will restrict access to advice

Scottish Widows says RDR proposals including adviser charging and the removal of factoring will reduce the availability of advice.

In its response to the RDR, Scottish Widows says the FSA’s proposed ban on factoring will reduce consumers’ opportunity to receive advice on long-term savings.

It says as a compromise to factoring the cost of advice should be recouped over a maximum of five years.

Head of retail distribution development Robert Kerr says he is also concerned that the proposals will drive advice upmarket and will leave mass market consumers un-served.

Kerr says: “Our research reveals that 54 per cent of consumers said that paying a fee for advice would make them less willing to seek advice and of these, 84 per cent said they would look for an alternative or make their own arrangements rather than pay a charge to an adviser.

“The FSA’s current proposals could therefore have the unintended consequence of disenfranchising those people who need assistance the most.”

Kerr says it is critical that the FSA develops other advice models, such as simplified advice, to serve the mass market.

He says: “We believe that simplified advice could be used to extend access to consumers for savings, investment and protection products.”

Scottish Widows supports the FSA’s pursuit of a step change in professional standards, saying it is an essential component to help restore consumer trust, deliver improved outcomes and attract new talent into the industry.

Kerr adds: “We believe it both appropriate and timely that the FSA undertakes this review as it is essential that customer confidence in retail financial services is improved.

“However, great consideration and care is required to appropriately determine its implementation and what should be within the scope of the RDR. If the RDR results in a marked contraction in advisory capacity and fewer consumers receive advice, the RDR can not be considered to have achieved its objectives.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Scottish Widows’ reply to the RDR is very interesting because they have ‘backed up’ their opinons and observations with research. Where is the FSA’s research to back up what they believe is ‘correct’ for the advisers. When are the FSA going to realise they are a Regulator that should stick to regulating and NOT manipulating the marketplace.

  2. We had already drafted our Keyfacts about our services and costs & Client Agreements to take in to account thw wording in the June RDIP report (unfortunately the FSA refused to read them becuase of the section on Consumer Responsibilities and they don’t seem to want us to spell these out to clients!). Anyway my point is that we drafted in the issue of recording adviser charges over the two year period as the RDIP suggested (we moved it from Keyfacts to CATOB in our final draft as I suspect the FSA will need to do otherwise the Keyfacts cease to BE keyfacts). I could see Scots Wids argument for allowing the adviser charge to be spread over 5 years, however, in view of the fact the current complaint rules have 6 and 2 year limits, but are due to be reduced according to the ministry of justice, it seems to make mroe sense to tie any time requirements to similar stages, i.e. 3 years

  3. Sorry here is the link to the relevant article and why therefore I think that 3 rather than 2 or 5 years may be more appropriate to spread any adviser charges over. Shoudl factoring be allowed over the 3 years? The more I think about it, probably NO as if you balance the business you look for from different clients sectors it should be possible do avoid the need for factoring.

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