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TSC member warns over RDR threat to diversity

Treasury select committee member Jesse Norman has raised concerns that the retail distribution review will lead to reduced diversity in financial services.

Speaking at a fringe event at the Conservative Party conference in Manchester today, Norman said the reduction in diversity the RDR will deliver through lowering adviser numbers is part of a long-term trend which should be reversed.

He said: “In the 1980s the City of London was much more diverse than it is now. Now we have seen the triumph of the corporate model in financial services and an awful lot of diversity has been abolished, it would be a very fine thing if we were to get some back.”

Also speaking at the fringe, Nationwide product and marketing director Chris Rhodes said Government policy must foster diversity.

He said:  “As we look at the policy response to de-risk financial services we must not kill the diversity of business models which will deliver this local free flow of capital. We should be really careful there is diversity of the provision of savings, lending and the provision of capital and I think there is a danger we are going in the opposite directions.”

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. Is someone out there listening at last?
    or is it too late???
    I know I sound like a record that has got stuck, but why has it been so obviouse to myself and a small number of IFA’s, wealth managers and stock brokers for so long and others are only just waking up to the true purpose of RDR? To get rid of us and hand retail distribution to the banks.

  2. Oh Gawd. It’s not FS that needs ‘de-risking’ at all. It’s only got risky because of the moral hazard crearted by the failed FSA and clueless functionaries like Sants. Bureaucrats and their ignorance create chaos. freedom and markets create spontaneous order.

  3. It’s all about what constitutes a sustainable business model. Afrer polarisation it was obvious that the IFA model was the sustainable model whereas the direct sales force was not sustainable. Equitable Life gave the direct route its best shot with a marketing campaign attacking commission earning advisers and manipulating with-profits bonuses to top the past-performance tables and attract sales staff and customers. If RDR goes ahead with its commission ban, the IFA model will not be a sustainable business model. Mr Norman is therefore correct, it will reduce diversity.

  4. What we need is more politicians to have the balls to stand up to the FSA and say RDR needs to be delayed and reworked.

    The FSA can’t even decide on whether a restricted model of advice is going to go ahead or not so what’s the chances of them sorting out the more complicated areas of RDR before 2013.

    The fact is that too many higher officials within the FSA only have the interest of the big banks and insurance companies at heart rather than trying to encourage diversification and making a healthy market place.

  5. @Peter Herd. Wot? Politicians like Hoban? Are you serious? He’s a large part of the problem.

  6. I have posted this before and I will do it again! At a FIMBRA meeting with the chairperson (female). I naively pointed out that their process roadmap would drive many IFAs out, reducing the numbers dramatically. She raised her eyebrows and said that would be good as it would be easier for her regulators to oversee a smaller number if banks and insurance companies & networks than plethora of fragmented IFAs. Guess what? It looks as if a plan is coming together!!

  7. Thank you Mr Norman, you are correct.

    The RDR will be a disaster for our industry but the FSA is so far up its own a**e that it can no longer see the light!

  8. Is there any way of finding out how many IFA`s have applied to cancel their permissions this year? I bet it`s dramatic as a friend of mine applied early in January and has been told by the FSA that it will take a year to procoess as they are “snowed under” with applications!

  9. Of course the RDR will fail – it always was going to. Problem is this debate should have taken place years ago.

    Of course it will destroy the industry widen the savings gaps – it always was going to.

    Of course it will prevent huge swathes of the population from getting proper affordable advice – it always was going to.

    There are none so blind as those who will not see – only now are some waking up and seeing what was there for all to see all along – I fear too late !!

    Still think positive, (Peter Smith heading up RDR from the FSA stated if RDR doesnt work we’ll do something else – no blame or responsibility there then) when it all goes t+ts up (as it surely will) we will go back to where we where AND where we should have remained – a 6 -7 year cycle maybe – what goes round comes round ??? Can you and I be bothered to wait !!!! If we do what state will RDR have left the industry and more importantly the market and clients in ??

    So much to look forward to eh !!!!

  10. Well done Jesse, and thank you

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