Conservative peer Lord Howard Flight has warned the RDR will result in advisers losing interest in clients with less than £100,000 and attacked the FSA for failing to understand people are not prepared to pay for advice.
In a letter to the Financial Times at the weekend, Flight says the FSA is “hell bent” on the RDR’s commission ban despite the detrimental effect this will have on access to advice.
In the letter, Flight says: “The rich will be affected little; they have the resources to pay for advice.
“But financial advisers will not be interested in those with savings of the order of £100,000 or less who I doubt will be willing to pay fees out of after-tax income of the order of 1 per cent or 2 per cent per annum. The net result will be many fewer people getting any financial advice.”
He suggests the German approach to reform may be more effective, where IFAs are allowed to opt out of a commission ban with their clients’ permission.
Flight adds: “The problem with the Treasury and the FSA’s elitist attitude here is they do not appear to understand the man in the street is not willing to pay what would be significant regular fees out of after-tax income when frequently no changes are being made to their holdings.”
Attain Wealth Management managing director Gordon Crothers says: “Unfortunately, while I do love this job, I do have to make a living. Sometimes the FSA forgets that.”
Last week, Money Marketing reported Flight is tabling an amendment to the Financial Services Bill which would scrap the Financial Conduct Authority’s new powers to publish early warning notices.
He claims the powers, which would allow the FCA to publish details of firms or individuals that are subject to ongoing enforcement investigations, amount to “lynch mob justice”.