Last week’s Parliamentary RDR debate was a truly extraordinary affair. To see 80 MPs hang around late into a cold November night to listen or contribute to the debate, with no party whipping or vote, put paid to those who have been suggesting political concerns about the RDR are coming from a tiny number of renegade backbenchers.
Among the 30 or so contributions to the debate, there was a near universal consensus from across the political spectrum. Some contributions were a little light on detail and some of the claims a little outlandish and a few MPs appeared to be reading off a script they had never seen before. But there were also a number of impressive contributions. Labour Shadow Treasury minister Christopher Leslie’s contribution was significant, suggesting a change in tack from Labour which has showed little interest in the RDR over the last few years.
He agreed with the need to move to a more transparent charging structure and higher qualifications for new entrants but he also suggested that what he described as Labour’s “pro-consumerism” could be extended to concern at the effect of a significant number of IFAs leaving the market and he showed support for some kind of grandfathering solution.
Leslie suggested possible amendments to the upcoming Parliamentary bill over the restructure of financial services regulation, which could leave some vocal Conservative backbenchers in an awkward position of having to decide whether to vote against the Government.
The RDR has snowballed as a political issue since Tory MP Mark Garnier gave an interview to Money Marketing in October. Many were quick to dismiss the concerns of backbenchers, underestimating the hunger of the new intake of MPs to act independently of party and, especially since the expenses scandal, show they are doing a useful job representing their constituents.
It is easy for lobbyists, company spokespeople, trade bodies, media IFAs and journalists to get caught up in our own little bubble. Many people you are speaking to have been enveloped in a cosy consensus on the need for reform at all costs.
The agenda behind this can stretch from a passionate belief in the need for reform for the right reasons to deeply self-interested motives and includes many who are bored of talking, lobbying or writing about something that has been going on for a few years and just want the FSA to get on with it.
MPs do not live in such a bubble and neither do many of their IFA constituents who are concerned about reaching the new requirements themselves or about the dangers to society of a significant number of IFAs leaving the industry.
Hundreds of IFAs have lobbied their MPs to express their concerns and the plight of advisers has hit a nerve.
In many cases, the IFAs who have been raising concerns on the RDR to their local MPs are important pillars of their community and may be personally known to the MP. They are far from political agitators and rarely complain without good reason so when they raise concerns, MPs sit up and listen.
The momentum has been helped by many advisers who already have the required qualifications and business models lobbying their MPs.
It is nonsense to suggest that such a groundswell of political concern has no chance of influencing policy.
It would be folly for IFAs to down their exam books and business transformation blueprints and think the RDR will go away. It will not. As Mark Garnier said in his address to Parliament, the agenda of MPs is not to derail the RDR or turn the clock back on the move to greater professionalism and charging transparency.
But an important consensus seems to be developing on the need to ensure as much as possible can be done to stop a significant number of IFAs leaving the industry.
Senior management at the FSA will have been taking careful note of the growing political interest in the RDR. I would suggest the issue of consumer access to advice is something that is also troubling many within the regulator, especially as any plans for simplified advice seem to have evaporated.
The powerful Treasury select committee is also likely to apply pressure through its consultation on the RDR, with a number of members raising concerns during the debate.
In responding to MPs, Treasury financial secretary Mark Hoban’s speech was far less antagonistic than his infamous recent Westminster Hall address. While suggesting it was right the FSA “gets on with its job”, he also said it should listen to the issues raised.
Heavy political pressure is almost certainly not going to make the RDR disappear but it is quite possible this growing political consensus helps guide the regulator to look again at the current cliff-edge deadlines and introduce a greater degree of pragmatism to its policies to ensure the interests of consumers are definitely being served.