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TSC: FSA’s RDR behaviour will be addressed in FCA inquiry

The FSA has rejected Treasury select committee calls for the RDR to be delayed by 12 months but says it will continue to monitor industry progress towards higher qualifications carefully.

Published in July, the TSC’s report called for the deadline to be put back by one year to give advisers more time to reach QCF level 4.

In its full response to the report, published today, the FSA says it is sticking to the January 1, 2013 deadline, citing research suggesting 91 per cent of advisers expect to meet the qualification deadline.

The regulator says it intends to publish guidance for possible exemptions for advisers who fail to meet the deadline for reasons such as ill-health. It also points MPs to a work-based assessment it has been consulting on. “We are told this should be particularly helpful to more experienced advisers,” it says.

The response says: “In light of the new research on adviser preparedness, and other mitigating factors, we believe it reasonable to continue with the existing timetable.

“We will, however, continue to review and assess the industry’s progress carefully.”

TSC members attacked the “arrogance” of the FSA when it released an embargoed response alongside the committee’s report rejecting its main findings. Last week, members of the committee hit out at what they called a “hollow” apology from FSA chief executive Hector Sants over the response.

The research suggests 50 per cent of advisers already hold an appropriate qualification while a further 39 per cent have started studying.

An FSA spokeswoman says 1000 advisers took part in the survey between July and August, including tied advisers and IFAs. She adds that participants knew the research was being carried out on behalf of the regulator but that no individual responses would be identifiable. The full survey is expected to be published this month.

Elsewhere in its response, the FSA says it recognises the risk that clients may be discouraged by advisers from moving pre-RDR investments where there is an ongoing income stream. “We will be closely monitoring this as part of our ongoing supervisory work and we will take action where we find evidence of unsuitable advice,” it says.

In response, the TSC says the FSA’s actions illustrate concerns about the accountability of the regulator that it will look to address in its inquiry into the new Financial Conduct Authority.

It says: “In particular we very much regret the FSA has not accepted our recommendations that the implementation of the RDR be delayed by 12 months, or that non-qualified advisers be able to operate with a system of proper supervision beyond the implementation date.

“We repeat our concern that the main purpose of the RDR, namely consumer benefit through better choice and competition, will not be served if its introduction leads to a substantial loss of advisers and firms.”

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Comments

There are 15 comments at the moment, we would love to hear your opinion too.

  1. The TSC are saying all the right things, now all they need is to get some teeth.
    I could say, I’m all right Jack, please ignore the TSC to the FSA as I have my level 4 now (and will now return to non mandatory exams which will be useful for my clients rather than something someone else dictates), have been adviser charging for some time (but still tweaking it) and had increased capital adequacy ready for the new rules.
    The delay to the capital adequacy measurement has meant that instead of building up cash which cannot work in the business, I have instead invested in developing our premises and will now be taking on new staff as the capital adequacy delay means the capital can be made to WORK for my business rather than drag it down.
    I don’t want to see the RDR stopped in its tracks (I have my level 4 now) but like many, I have been banging on for something like 6 years, that combination of qualifications, commission ban and capital adequacy increase and measurement change (the last being the stupidest bit) all hitting at the same time was complete lunacy….
    The FSA have delayed one thing (cap ad), but if they don’t delay the qualification problem, then I thin we will loose too many good and trusted IFAs. One year will actually make all the difference as those nearly there will then make it and those not there will have another year to arrange their exit strategies to the benefit of their clients.
    It will then mean advisers like me (aged 46) looking to expand will be able to nurture new staff while helping non qualified advisers exit gracefully.
    Keep up the pressure TSC and get a commitment that whatever the FSA do, if it is contrary to what they were told was common sense, heads ROLL with no falling on a Golden Sword & Knighthood.
    DO NOT REWARD FAILURE.
    Oh and I would like to see commission go, but it MUST be replaced with organised factoring for regular savings (The FSA co-ordinates factoring of FSA fees and AIFA does for IAFA fees, so why NOT for advice costs)and MUST allow distribution costs to be charged to providers as Ken Durkin correctly & regularly points out.
    Oh and as to teh Independant v Restricted debate, I think that the MAS has been the last nail in teh coffin for teh devaluation of the Independant tag and we should put a nail in it’s coffin and reverse our approach to having a route to Independance, starteding from exresssing clearly to clients the restrictions in our service (for instance mine would be I don’t do Occupational Pension Transfer or Long Term Care and so on), we place most of our Group pension schemes with one insuer but I have no tie to a particular company and will be reccoemdning NEST to some employers and the Danisg version to others.
    Reverse this and let the MAS and those advisers who think they can start from an Inependant stance prove their independance under the new rules….. I think it will be a lot harder than everyone thinks.
    If you follow it logically, as authorisation through the FSA is mandatory and currently there are NO accredited bodies who will issue an SPS unless you sign their codes of practice (and the CII’s, although I am not knocking them, allows you to be disciplined for being publicley critical of them), NO ONW will be literally Independant post 2013 and it could legally be challenged that you were misrepresneting the true facts even if it was forced upon you by the regulator.
    As with the Geneva convention, an illegal order carried out does not absolve you of committing the crime. F- pack staff need to remember this as if it is proven they have knowingley breached our Human Rights, I am pretty sure some clever lawyer will come after their millions built up whilst in senior positions at the FSA.

  2. Once again we see a quango going against the elected representatives of this country. In olden days Sants would be put in the Tower. The TSC should now insist that the FSA do as it asks not what the FSA thinks . The TSC has noted that the public will be penalised by the RDR but arrogant Sants does not

  3. Unelected,, unaccountable, all powerful, Quango.

  4. Good!

    There is more to the IFA world than RDR………….lets move on……..

  5. Just who do the FSA think they are ? They choose to ignore the advice of the elected representatives of this country. Time to disband the FSA and start again !

  6. Dear Anonymous 12.27 pm

    The RDR is the greatest assault on both advisers and consumers since Mark Weinberg first arrived.

    Frankly, we are all pig sick of it but it is here and knocking on our doors.

    How much of the past 23 years of regulation has assisted the consumer? This latest attempt at validating a regulators existence will not only fail but will make matters worse for all concerned. For that reason we continue to fight. After all, to do anything less would be to give in.

  7. In the Late 80’s an act of parliament was passed to protect consumers against bad advice and rogue traders, it was called the financial services act that is why we have the FSA today.
    Over the years the most important people (The Consumers) have been totally forgotten, as the regulators with their fat cat incomes are totally submerged in their own self-importance. When for god sake are the general public going to be told, in a time when they least need it with inflation spiralling, fuel bills out of control, and another recession looming, that they are now going to have to pay for all the advice they wish to seek from an IFA. Are the general public no longer important or have the FSA simply forgotten they exist. A recent survey conducted stated that 85% of the public had not even heard of RDR. Surely if there isn’t some a legal issue here there is most defiantly a moral one when people will wake up on January the 2nd 2013 and ring an IFA for advice and find that they now have to pay fees. Imagine if one day there was a knock at your door, your postman was standing there mail in hand and announced that from now on you can only have your mail if you pay a daily fee???? Tell us FSA, when are the public going to be properly informed and why has all this gone ahead without any public consultation?????

  8. Because if the public did know about this, and many other political changes, they would not let it happen.

    The only motivation of these organisations is to secure their own inflated salaries, bonuses and pensions.

    Perhaps we should all be camped outside St Pauls.

  9. There are 30000 plus IFA’s, we all have lots of clients, we only need ourselves and 3 or 4 clients to sign a petition and it would be properly debated in parliament. What about a big push for a judicial review because im sure there is a case here.Why isnt that no teeth AIFA doing anything along these lines instaed of rolling over and accepting everything. ANSWERS PLEASE

  10. Richard, AIFA would have been known as collaborators in WW2.

  11. At least we know where we stand with the deadline. I can see both sides and have just recently obtained my DipPFS having worked at it over the last 3 years.
    Regarding good IFAs who were hoping for that extra year, they now need to get their heads down, or if they require a little longer to pass the exams, (which is what most of this discussion is about) then whats to stop them from introducing business to another IFA for a short period of time and then re authorise, could be a little messy but at least will give them a little more time and they will remain in business in the long run

  12. She adds” that participants knew the research was being carried out on behalf of the regulator but that no individual responses would be identifiable”. Yeah, but did anyone really have enough trust in the regulator to believe that?

  13. Dear Richard Wright,

    The public should be aware of what is about to happen to them, and its probably our responsibility to make them aware.

    The trouble is, something like this needs organasation. Have a look at 38 degrees, they are always looking for a cause. AIFA is a waste of space..

  14. And what, if anything, can the TSC do if the FSA continues to cock a snook at it? From where I’m sitting, the answer appears to be Nothing whatsoever. And to think we fondly imagine that we live in a democracy.

  15. What happens if RDR does not do what was intended?

    Will they all resign and pay compensation to all those who have lost out as a result?

    What is the point of Parliament and the TSC if they can just be ignored?

    The FSA and Mr Hoban seem to think the way to solve a problem is to simply ignore it and any concerns about it, I just wish they were accountable and liable personally like the rest of us.

    The whole system is unjust and unfair and from a Government that promised us fairness and responsibility and justice, they are just words as far as I can see, they didn’t mean any of it. I don’t trust any of them, despite the valiant efforts of the TSC.

    RDR will not solve the problem of encouraging people to save, reduce debt and generally plan their finances better etc.

    The Money Advice service is even reducing their staff numbers, why is that, surely given it is “free” people should be grabbing this “free” advice like no tomorrow?

    Qualifications won’t stop people being given bad advice or even ripped off, it is nuts to think it will.

    If qualifications are so good why is it that the compensation bill in the NHS is budgeted at some £15 Billion the majority because of clinical negligence. Doctors I guess need to be better qualified as well then and that will solve the problem!!

    G60 solved the problems over poor advice on pension transfers didn’t it? I recon it actually encouraged it.

    I wait to be proven wrong.

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