This week’s RDR feedback statement muddied the clear split between advice and sales that the FSA proposed in its April interim statement.
Advice will be split between independent advisers and sales advisers, with sales split into three channels – sales advice, including multi-ties and single-ties, guided sales and execution-only.
At the FSA’s RDR conference in London on Tuesday, Cummings said: “It is notable that, of the 900 or so responses, the vast majority were small to medium-sized firms and I am here to tell you that those firms feel let down and they feel annulled, having supported the regulator through most of this process, to be in a position where we find yet again that the bar for the IFA community has been pushed up far in excess of anybody else in financial services, at a time when costs are expected to increase.”
In an angry exchange in a panel debate with British Bankers’ Association chief executive Angela Knight, Cummings said the FSA’s moment of clarity in the interim report had been destroyed by “enormous pressure” from banks.
Knight praised the FSA’s sales/advice backtrack but, referring to the work of a tied bank adviser, Cummings said: “That is purely sales and for us to pretend it has anything to do with advice is a fiction.”
The FSA says the original sales/advice split may be inconsistent with Mifid but Cummings says if this is the case, then a full review of the term advice is needed at a European level.
Speaking to Money Marketing at the conference, FSA managing director of retail markets Jon Pain said it was inevitable that the RDR will push up costs for IFAs.
Investment Management Association director, authorised funds & tax Julie Patterson says: “We remain concerned whether consumers will understand the concept of sales advice. It is important that any new standards or restrictions should be embedded in rules, that those rules should be applicable to all sectors and that they apply appropriately to firms that are providers or distributors or both.”
Syndaxi Financial Planning managing director Robert Reid says: “This is a great opportunity missed. To have this fudge between the two categories is crazy. Is the FSA honestly expecting the public to swot up on all the different types of advice and sales?”