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Tony Byrne: FAMR geared up to let the banks back in

Tony Byrne

After such a long wait, the 85-page Financial Advice Market Review report is nothing but a damp squib for anybody who cares about the advice industry in the UK today.

And this after the fiasco of the RDR, spending £1.5bn creating an even wider advice gap. I do not need to go into detail about where it went wrong but the problem is nobody at the FCA is brave enough to say “we stuffed up.”

This FAMR report is quite clearly a green light for banks to re-enter the market, with much more streamlined documentation and processes, and even a new watered-down definition of advice. The ability for a trainee adviser to work without qualifications for four years is also an outrageous snub to all those who worked hard to obtain Level 4 qualifications and beyond.

In fact, the entire aim seems to be to make it easier for banks to missell on a wide scale, which is exactly what will happen once again. It is as plain as the nose on your face.

Not one of the FAMR’s 28 recommendations concerns any IFA or financial planning firm. When you consider IFAs continue to control more than 50 per cent of the financial services market, this is a true indictment of the FCA’s view of us, especially when you consider  only 2 per cent of complaints are against IFAs and of which only a third are upheld. The vast majority of complaints are against banks and this tarnishes the image of the rest of us.

Why is it the FCA board of directors still contains only one token IFA? It is a scandal. The FCA is dominated and controlled by both the Treasury and its buddies the bankers.

Instead of pandering to the big bad world of the banks, why does the FAMR document not truly address the real issues affecting professional financial planners? Where is the investigation into the inherent unfairness of how the Financial Services Compensation Scheme is funded, with the good guys paying for the bad guys? Where is the detail on professional indemnity insurability challenges and the lack of a long-stop?

We all know the public is better served by IFAs and financial planners than product-flogging bankers. Society is better served by professionals that truly care about their clients and build long-term, trusting relationships that make a real difference to lives.

The FAMR seems to be geared towards allowing banks to re-enter the market on very favourable terms, with little regard for the end consumer. The regulator is clearly pinning its hopes on the banks’ ability to succeed with digital or robo-advice but I do not believe they will. Professional independent financial advice is a force for good. The FAMR needs to be re-written with that in mind.

Tony Byrne is financial planning director at Wealth And Tax Management and author of Wealth Magic



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There are 7 comments at the moment, we would love to hear your opinion too.

  1. Volume = Better revenue streams Tony (for all of the mouths that need to be fed), that’s what it’s all about. We cannot/will not do this as a sector.

  2. Maybe the Canary Wharf art fund will be collected from a wider pool – about the only good thing I can see about it. What could go wrong with underqualified people giving “advice”. After all, look at the job that nice Jeremy Hunt is making at the NHS.

  3. I read it again this morning in preparation for a talk I am giving tomorrow. it was as bad a read second time around as the first! The recommendations, all 28 of them, as Tony says will have no benefit at all to the IFA community. I would go further no benefit to the consumer.

    One of the recommendations (20) even suggests that the FCA review of the FSCS funding “should explore the merits, risks and practicalities of alternative approaches”

    Bloody hell that’s an original idea 🙂

  4. headbelowthe parapet 12th April 2016 at 12:34 pm

    Somebody needs to fund the advisory share of the FSCS and unless the banks come back into the fold it will be us! Everyone at the FCA must know that the banks are a bit rubbish at giving suitable advice, but they also know they’ve got deep pockets. If a bank doesn’t have a sales arm, it doesn’t pay FSCA levies as an advisory business, and if they don’t start paying the sector will be squished under the weight of the levy. Our Masters either won’t (or can’t) change the structure of the levy so they’re trying to entice the banks…We’re much, much better than the banks so I’m not overly worried.

  5. Absolutely Tony.

    It goes to show that the RDR was so much hot air and used to justify jobs and salaries at Canary Wharf.

    It is still about flogging products and not providing advice. The great and the good know only too well that the majority are not interested and would rather borrow and spend – this is actually Government policy and is working well as private debt levels climb continuously, making us the most indebted nation in the world.

    Good advice for the many would be to reduce debt before anything else, but how would that suit the banks, who grow fat on 19% interest on credit cards and unsecured borrowing.

    So we have FAMR, which is merely an excuse to let the banks feed on the gullible once more. Back to lousy retention rates and fat profits for the banks and precious little advantage for the suckers.

  6. One of the key things I think you have forgotten, and clearly demonstrate by the below quote:

    ‘IFAs continue to control more than 50 per cent of the financial services market’ –

    I would be suprised if it was even 0.2% of the market – There are over 1.2 million people working in financial services, with an annual value of nearly £100bn and c.12% of the total government tax recipts.

    Financial advisers are small fish in a very big sea. One of the large UK banks alone employs more staff than there are financial advisers. When push comes to shove the government will always look to the big players in any market.

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