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TSC Tory calls for RDR grandfathering

Treasury select committee member Mark Garnier has called on the FSA to allow grandfathering as part of the retail distribution review and reconsider its ban on commission.

Speaking to Money Marketing at the Conservative conference in Birmingham this week, Garnier branded the qualification requirements for existing advisers as “outrageous” and suggested that experienced advisers should be grandfathered as long as they demonstrate a certain level of knowledge and skills.

He said: “IFAs have been hit by the RDR and they are having to go out and take more exams. even though, in most cases, they are more qualified than the people at the FSA.

“The FSA is not allowing any element of grandfathering and it seems outrageous. I would be very happy for experienced IFAs to be grandfathered as long as they can demonstrate they have a certain level of experience, knowledge and skills.”

He said he supports an overall increase in qualifications for IFAs but it should be phased in over a longer period.

Garnier is Conservative MP for Wyre Forest and was formerly an investment banker who went on to set up his own investment management business. He called for the FSA to look again at introducing a flat rate of commission as an alternative to banning it.

He said: “The FSA should introduce a flat rate of commission across all products. If everyone charged the same amount, it would remove concerns about commission bias and consumers would know exactly how much they were paying, no matter what product they bought.

“People will not pay for advice by the hour. The service IFAs provide to consumers is incredibly important and valuable and I think we continuously interfere with the sector at our peril.”


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There are 93 comments at the moment, we would love to hear your opinion too.

  1. At last a common sense view on what will benefit the consumer most.
    Qualification and knowledge are vitally important but so is the experience of knowing how to obtain, understand and then interepret clients circumstances.
    That results in accurate and sensible planning.

  2. I would thank Mark Garnier for saying what it appears he has in this quote. I have been saying all along, it is NOT the aims of the RDR which are the problem it is the combination of changes propsoed all at the same time and as reported today, the proposed increase in FOS claims from £100k to £150k will force PI cost up as cap ad requirements increase along with quals and the change to adviser charging. Anyone thing in isloation is doable (we’ve done adviser charging changes now, I was working towards quals and half way to inccreased cap ad, but there was still a risk I would not get everything done by then) Now looking at this latest straw, I think my back has broken and I will now just leave the job I have done since leaving school 25 years ago and I don’t really care what I do now.
    So to Mark Garnier, talk is cheap. The only people the FSA are answerable to is parliament, they’ve ignored evberything advisers have said for years (consultation does not mean you listen if your mind is made up), but even parliament, becuase of the way FSMA was structured can have little influence in teh time scale remaining for RDR implementation now.
    I think I might go in to politics now…

  3. is this man really a politician? – he talks perfect sense particularly in respect of standardised commission – whatever your stance is versus fees or commission

  4. Wow! a MP that talks sense, and he is on the Treasury Select committee.

  5. I didn’t think any politicians had any common sense.Its nice to be proved so wrong.

    Perhaps he could now go and explain these comments, slowly, to Mark Hoban

  6. I’ve met Mark Garnier and he seemed to be a very sound bloke, though whether or not his call for grandfathering will cut any ice with Mark Hoban is moot. But at least we have a voice in parliament, which is something.

  7. Allelujah and there was light ! A commonsense and realistic comment for once re RDR. Lets hope our possible new champion succeeds where the civil servants have failed.

  8. if theFSA is to be disbanded put this man in charge now

  9. It sounds good on surface but hasn’t this been covered before? Competition law – Providers of a service have the right to compete against their couterparts and charge whatever fees they like.
    Only way to standardise things has been to ban commission altogether.

  10. Another person looking to uphold the ways of the past and prevent the industry becoming a profession.

    As a fee based adviser whose firm has charged by the hour for the last 10 years, his comments are laughable.

    How much more time to people want to get their qualifications? This has been coming for the last 5 years at the very least, if you haven’t done the relevant exams by 2012, then why should you be given yet more time?

  11. Hey, that’s a good idea!

    A Maximum Commissions Agreement!

    Why has nobody ever thought of that before?

    I must be missing something, or was the OFT missing as much as one grain of common sense all those years ago?

  12. Hey, put this man in charge of RDR, he seems to have a bit of common sense!!

    A standard commission rate for “Jo & Joe Public” who won’t want to pay a fee out of their bank account for the basic advice and products they need, and fees for everyone else who may require products, but have more comprehensive general financial planning needs.

    Utopia! Alas, it will never happen as the FSA have gone too far to have egg on their faces… never mind, it was a good idea whilst it lasted.

  13. Low and middle income people will not pay fees. this will mean that they will not get the financial advice they need.
    wht about the FSA treating IFA’s fairly?
    New exams for ne subjects is ok but scrapping qualifications is madness

  14. I have heard Mark Hoban speak at an annual conference and I have never heard anybody speak for so long but say absolutely nothing! Perhaps Mr Garnier could apply for his job, it sounds as if every IFA would be very happy if he did!

  15. AST last an MP who knows what he is talking about and makes total sense. All IFAs and Mortgage Advisers should now back this up by contacting their MPs, emailing Cameron, Osborn and Cable and demanding that action be taken against the FSA to stop them denying clients the right to independent advice before we are all forced to close down. It was bad enough Gordon Brown hammering the pension funds, destroying the pension industry and wasting the money stolen, without the FSA continuing to be given carte blanche to finish the job off, at the same time taking away the choice as to how people pay fot heir mortgages. It is time that all advisers joined together to make our voices heard where it matters.

  16. Mark is not alone in his views. When I met him along with Harriett Baldwin MP – Member of Parliament for West Worcestershire and Robin Walker MP – Member of Parliament for Worcester they were all astonished at the treatment of IFA. This statement must encourages all IFAs to lobby their MP. It can and does make a difference.

  17. How refreshing a bloke on the TSC no less with a Financial Services background (albeit Merchant Banker) speaking absolute sense about the ACTUAL effects of regulatory meedling in an industry model that is not, contrary to FSA belief, and never has been broken.

    More power to your elbow Mark Garnier I wish there were more like you – now get ALL the TSC onside and fire a few shots at Hoban, Sants & FSA sharpish !!

  18. At last. A man with vision, understanding, common sense and business acumen.

    Thank you Mark Garnier.

  19. At last a government that makes sense and is not pressured by the financial institutions.
    Grandfathering is a more senseable approach and level commissions should be applauded and the public would continue to get independant advice without high hourly rates.
    Can Mr Garnier now consider giving equal rights to all on the 15 year longstop law.
    A Positive move that gets my support.

  20. Michael Hayward 7th October 2010 at 9:50 am

    Bit different to that Lib Dem Treasury spokesman (forgotten his name already) who said IFAs were way past their sell by date…

    But excuse me aren’t they in the same government ?

  21. Someone talking sense for once unless changes do occur to RDR, Independent Advice will be only for the rich – how can this be right?

    Grandfathering makes sense as does controlled comm and or fees. Lets write to our MPs asking to promote Mark Garnier view.

  22. At last a MP who realises that the FSA do not have qualified staff do not understand that a lot of people cannot or will noot pay fees. Send the RDR to the waste bin and make the FSA come to terms with the mess they have made and will create unless they bring in sensible ideas for the future of financial services in this country

  23. I think it time we all write to our MP and this is great news someone in government talking sense.

  24. I agree with him wholeheartedly – but with views like that he might just get drummed out of the brownies. Bear in mind that RDR was spawned out of a whim and not a need……… there are far more pressing needs that remain unaddressed by the regulator it’s just that they are not so easy as IFA bashing.

  25. with regards to commission bias why not all providers offer the same level of maximum commission available to advisers. Providers can then set their own charging structure for the products and advisers can then agree the level of remuneration with the client. Removes commission bias and retains competition between providers

  26. Comon Sense Prevails !!!!!! At last, long overdue !!! Finaly, someone is starting to ask the right questions instead. Shame it comes from a politician and not a member of the industry.

  27. To Chris Budd:
    I am sorry Chris but you seem to be outnumbered on this one. I am very happy for you to be a successful fee based adviser and to take all of the qualifications you like. Good for you. It doesn’t change the fact that it is immoral for a regulator to tell us to requalify or get the boot from their job after half a lifetime doing it. You could not run a society if everyone had to do that. There would be chaos. This is not a fascist state, yet. Supposing the new regulator want you to do it again in five years? And then again, and again. Weren’t we assured in the 90’s that it was a one off
    Aside from thousands of decent and good IFAs the RDR will not be good for the public either. I am sure you are an extremely good and knowledgeable IFA but there are some out there who have lots of qualifications but are still crooks. And a crook will find a way around any commission or fee paying structure if they put their mind to it.
    I could take the extra exams. But I don’t believe I should be forced into it and I would rather spend the time working with customers. Much the same as most of our colleagues I would imagine.

  28. Grandfathering – yes for all day to day business.

    What is wrong with a continuation of specialist exams for specialist advice ?

    You want to advise on a SH pension or packaged Stocks and shares ISA – the grandfather.

    You want to deal in pension transfer or act like a pretend fund manager – then take the exam.

  29. David Cameron came out and said “wealth creation” is vital for UK PLC George Osborne has said we have to change UK economy structurally from one that lives off credit to one that saves and invests and Mark Garnier has now said this in support of an industry that the Nu Labour appointees at the FSA were set to destroy am I in a dream or are they just saying these things to stop the credit ratings agency down grading the UK ? If they believe they have to act and fast
    Back in the real world of mediocrity the other Mark Mr Hoban is not saying these things and has no intentions of doing anything other than sitting on his hands as others have said he can talk for hours yet say nothing.
    Might be worth emailing your MP about this?

  30. This is the most common sense I have heard on this matter, many small firms / IFA’s will welcome this and I suggest that if possible
    Mark Garnier gets together with MEP Godfrey Bloom to try to turn this pebble of common sense into a lake. Heres Hoping.

  31. Am I the only one who has images of a doddery old man dishing out Werther’s Originals and rambling on about tales from his past or convoluted driving directions, when I hear the term ‘grandfathering’? Actually, judging by some of the responses to this lone voice in the TSC, that might not be too far from the reality!

  32. Hoorah! someone out there thats talking common sense. I am all for professional development and increasing the levels and application of knowledge but let’s get it in perspective. Most IFA’s don’t deal with clients who’ve got a £2m pension pot! It will be interesting to see if Mark Garnier can convince the FSA.

  33. Mark Garnier is the first politician that seems to have a sensible view on RDR. Perhaps it’s because he is one of the few that has lived and worked in the real world.

    I have been an IFA for 18 years. I became Diploma qualified 15 years ago, putting myself in the top 5% of advisers (in terms of qualifications) at that time. I have taken various other courses since (G60, MAQ and others). I could quite easily have become Chartered by now. I also hold 2 degrees with serious mathematical and statistical content neither of which earns me one smarty point with the CII. Very well qualified with18 years of experience, 15 years of CPD and yet I am still required to ‘gap fill’.

    Effectively, I am being treated almost as a novice would be treated, having to take even more exams just for the sake of them. Incidentally, just as a CPD exercise I bought a CII course 3 months ago and was about to apply to take the exam and now discover that the course is redundant – even passing the exam of a course which has only been in existence for 2 years and was available until 3 months ago, I will still need to ‘gap fill’ because the NEW replacement course introduced just one month ago covers, supposedly, certain extra topics.

    Total TOSH and a wonderful moneyspinner for the CII.

    When doctors, accountants, solicitors, judges, engineers, nurses etc, etc are all told that unless they take more exams they can’t practice, despite having been qualified for many years with a wealth of experience and on-the-job training since, then I will accept the nonsense being foisted upon IFAs. Until then I can only throw up my arms in despair and disgust.

    I suppose if you don’t need any qualifications to do your job (FSA personnel, politicians, quangocrats in general) then you are pretty safe from such madness. Indeed, on their planet they might even fail to understand what IFAs are complaining about.

  34. Yes Martin Bamford you are a lone voice!

    The average age of an IFA is 54 years. The FSA will achieve everything it wants through natural wastage over the next 11 years – a short passage of time. You don’t need to destroy an industry and the livelihoods of many good men and women. Its a little thing called human rights! Indeed the EU grants a right to trade so what the FSA is doing is probably illegal in any case. Let the IFA have the same rights as the nursing profession. New Nurses will need degrees but no one suggests existing Nurses need to requalify.

  35. Glad to see the majority approve of Mr Garnier’s much needed comment and support to the industry. It is a shame that there always has to be one high & mighty sanctimonious fool among us though. Although in reality I doubt that is the case.

  36. Why not go the whole hog and scrap the RDR altogether? It is a very badly thought out piece of regulation, that will cost IFAs and the industry generally a considerable and unnecessary amount of money and will be of not benefit whatsoever to the consumers.
    Also, why does the FSA have this pre-occupation with scrapping commission? Consumers and IFAs are very happy with it, and it has been the accepted method of renumeration for donkeys years. By scrapping commission, it will put off the mass of consumers from saving as they will not want to pay fees, in the same way that far less pension plans have been taken out since the commission was reduced.
    We do not critisise the method of renumeration of the highly paid and useless senior staff at the FSA (well, we do, actually), so why do they keep interfearing with ours?
    There is also a considerable cost in time and money for IFAs to have to take all these compulsory exams. Good advisers have already been obtaining appropriate qualifications, so again, why this sudden pre-occupation by the FSA?

  37. Why oh why is it that those with the minority view on this are the most pompous and self rightious and most importantly short-sighted on anythging that does not agree with their viewpoint. It is ALWAYS the case when the subject of RDR comes up.

    I am sure that all would agree, if you want to be a fee based qualified ‘pretend’ fund manager (John Lappin did make me laugh) get on with it I have absolutely no problem with that – and if thats the way you make a living and your clients are happy – great.

    Your way is NOT the only way. Dont try to force your view on the majority.

  38. Martin when you have the long term experience that some of us have had, to go with your young years and paper qualifications also being one of the very few gold standard financial planners, you may learn what grandfathering is all about and, maybe a little humility and respect for age and experience..
    Meanwhile, other than your comments I believe the majority on here applaud this lone voice of reason.

  39. Sense at last.

  40. Well said Mr Gair. Take note Mr Budd.

  41. How simple is that, there was no need to spend countless millions on the RDR (or the FSA) only for this man to solve the problem in one sentance. Will he be listened to, of course not, it is far to simple and would embarrass all the Quangos that have bled the system dry comming up such nonsense as the RDR.

  42. Paul Standerwick 7th October 2010 at 11:23 am

    Refreshing to say the least!!

  43. To John Blackmore: I have no problem with having to prove competence even if it means taking specialist exams. Unfortunately, due to the FSA continuously ‘moving the goalposts’, specialist exams such as G60, G70 and virtually every other exam that I have passed (G10, G20, G30, MAQ, ER1, CF2 et al) are all partially redundant.

  44. A spokesperson from the FSA declined to comment……….

  45. Unbelievable!! This man obviously has experienced the real world unlike the majority of MPs.Put him in charge of the FSA.

  46. The thing with a dictatorship is that if the majority disagree, the dictator dictates, but if the majority agree, the dictator can appear to be following the people, so if they only do what they want, they will not always be wrong.
    I have nothing against Martin Bamford and Chris Budd striving for excellence and improving themselves for the benefi of their clients, but if you want us all to be and act like you, then spin don’t spit. i.e. Situation, Problem, Implication for the RDR are all the same, but the last bit is where the FSA’s lack of succesful salesman falls down which is the difference between the letter N and T ie Needs pay off v TELL (dictate or make mandatory rules), rather than what the FSA should be doing along with the PFS, which is needs pay off which is another way of saying sell us the idea of how we and our clients will benefit from RDR by VOLUNTARY means rather than TELL dictation/compulsion.
    The RDR was always claimed to be an industry led initiative, but it is NOT it is being FSA compelled.
    Simply having a different designation for granfatherd advisers from higehr qualified and call them grandfather if you like would have put consuemrs on notice that they might want to move to a Diploma qualified adviser, or stick with teh grandfathered one as he’s retiring soon or CLIENTS putting pressure on younger grandfathered advisers by the consumer saying “look Phil, I like you and I want to still deal with you, but if you don’t get your Dip be XYZ date, I WILL go to another firm”, or and perhaps more importantly, if there was evidence that qualifications reduces risk, this would already be recognised in PI premiums, but I only have basic quals and some of my DIP and yet my PI cost is below the minimum premium, hence my PI has remained static for years due to lack of ANY claims!

  47. Matt Timmins - Simply Biz 7th October 2010 at 12:10 pm

    Firstly it is encouraging that our profession is already on a journey to higher professional standards. I don’t think anyone would argue that this is not the right route to take. Advisers such as Mr Bamford (who runs a great business) should be applauded for their commitment to the sector and their clients and the differentiator these individuals hold through greater qualifications should rightly reflect this. I have nothing but admiration for them and if they want to set out their business to serve the HNW on a fee based model then that is great and I wish them every success – as I said they deserve it.

    However is HAS to be wrong that thousands of high quality advisers with good professional standing are threatened with expulsion for no good reason. The idea that up to 3m+ clients would be denied access to their trusted adviser post 2012 is completely wrong and against our national interest. We need a pragmatic approach to higher qualifications and not a cliff-edge date of Dec 2012. We should also recognise the high quality of advice that is already being given by the sector and the high level of consumer satisfaction, as evidenced by the FOS figures. Those who are already diploma qualified should have that recognition and use it to their advantage but for those who are not Diploma qualified we should remove the cliff-edge date and focus on a series of alternative assessments to help advisers transition over time

  48. Mr Garnier`s comments are totally agreed with. Solicitors and Accountants do not have to re qualify, Human Rights issues are lurking here. On going training and learning with CPDs should be the norm.

  49. Mark Garnier is our MP and has given us support prior to being elected. He unfortunately seems to be the only voice in this government to speak out in public against the atrocities of the FSA who haven’t a clue what damage they are doing to our profession. Well done Mark, let’s hope others will listen you have our support.

  50. Its so simple and yet it could work,problem is when did common sense prevail?

  51. i knew i was right in voting for this guy !! he came knocking my door last year and, whilst i don’t tend to have much time for politics or politicians generally, he did seem to make sense on a number of issues.

  52. “Then there was light”!!!!

    If we could vote for the head of the FSA, this man would have my vote, my family’s and my friends , my clients and anyone who know me…..

    Customer is King. They decide how they want to pay.Standardising commission is definitely the answer to the bias problem. Paying by cheque is not even considered an option by 98% of my clients even though they are given the choice ‘without’ persuasion. Though I must admit, the possibility of VAT usually deters them from the cheque choice.
    2% pay as this is usually for another advice type service.

  53. On reading the article I have just played ‘Land of Hope & Glory’ at full volume.

  54. It started as a trickle!!!!!!!!!!!!!!!!!

  55. Totally agree! Mr Broad is a fool- he obviously has the qualifications and model and like the FSA is happy for it to be imposed on everyone else.

    The trouble with regulation is that it is ultimately theoretical. So the perfect “sales” model i e fees is to be imposed. Look nobody wants to pay fees; not to their solicitor;not to their accountant. My wife is a solicitor and she knows how hard it is to get paid. But with those professions clients get their property and get their accounts done- transactions that cannot easily be achieved by the layman. On the other hand my clients can buy the products direct from the providers free of fee and often without initial charge. They do not; but, instead rely on my experience as an IFA to get them the best deal and ….if it goes wrong can get their money back!! What is wrong with that?

    This is a dictatorship! What is proposed is not just illegal but immoral.

  56. Thank God for the Tories

  57. I am in favour of qualifications, however I think it is iniquitous to require ageing regulated individuals with a good track record, and with many years experience, to take expensive qualifications when they have little chance of recovering the cost of the investment. Yes, I am talking about me and the many others in my position whose retirement plans are in jeopardy after many years of good professional service to clients.

    There can be no argument against the need for ever better qualified professionals but, imagine the outcry if nurses approaching retirement age were suddenly required to obtain further qualifications or be kicked out of their profession if they failed to comply or qualify. A reasonable person would consider such treatment to be barbaric, unreasonable and, possibly, unlawful.

    The unsympathetic to the plight of many IFAs caught by such ill thought out proposals by the fat cats of Canary Wharf will be “seniors” one day, God willing, and I hope that their life experiences will by then have softened their hearts. If not, then it seems only fair that the erratic law of “what goes around comes around” finds a target in them. I have a happy mental picture of the fate of Jacob Marley, burdened by the chains of his arrogant, crass and money grubbing behaviour in life, being visited on those “new model advisors” and others who place self-interest before fair play and the “common wealth”. You can bet your bottom dollar that those who escape one cull are not necessarily safe from the next, despite their imagined coat of invincibility. The far-sighted will see the need to fight injustice when they encounter it, whether they are directly affected or not. Sadly, I have little confidence in this “Big Society” approach, human nature being what it is.

  58. This is a long overdue “pragmatic” view of the industry.It is interesting that he also confirmed how important the role of the IFA is in our economy / society.

    On a more political note there are 2 basic concepts in law that the RDR is flouting
    1) Any business contract law”exists to make a profit” so RDR is actually contrary to basic Company Law as it inteferes with this fundamental objective.
    2) to ban people from a trade due to qualifications is a restraint of trade and contrary to EU law and potentially to the law of Equity

    I suggest that any Limited Company IFA firms sue the FSA over 1) above

  59. Although I support the idea of grandfathering in principle and hope that it is allowed for the benefit of others to be honest I personally no longer care.

    When I consider what it means to be a new model adviser I despair. So much of the modern FS world is simply nonsense and has little if anything to do with client benefit.

    I could pass the required exams – although I would have to lie a good deal – but then again why should I ? To those who remain – to misquote just a tad – a plague on all your houses.

  60. Where was this MP 2 years ago? However, it irritates me that we still discuss this issue of grandfathering when we should be getting stuck in and getting our qualifications and CPD up to date. There are too many IFAs who think they know everything and that experience is key and these advisers are dangerous. What they do not know threatens the quality of advice to clients.
    However it cannot be right that someone who sits all the R papers is considered a better adviser than one who has been doing the job for 20 years, done all the CF and AF papers relevant to their business model and still not be deemed competent! Visit us Mark Garnier and get a real view of IFA life.

  61. So why did the FSA need to pick this fight in the first place. They can have their RDR and I guess the IFA will deal with it like they deal with every other misguided piece of regulatory clap trap, but they can only deal with it if they survive level 4, which many won’t. The IFA model is not broke and doesn’t mean fixing so why level 4? Well someone has decided they want the IFA distribution – and who might that be I wonder?

    Mark Garnier is an honest man whose word is
    his bond. He has said repeatedly that he will not forget the IFA cause. The TSC is one of the most influential committees in government and we now have Mark fighting our corner. Let this be a call to all IFA to redouble their efforts and get onto their MPs. Mark has come up with a simple solution whilst the FSA have spent millions (our fees) to come up with a dogs dinner called RDR.

    Simple Solutions are best

    The US Space Programme spent six million dollars developing a ballpoint pen capable of writing in space …the Russian took a pencil

    Mark Garnier says standar commissions!

  62. Excellent. Also why have all advisers to be qualified to the hilt. Level 4 is sufficient for most of us and our clients. Anything else is specialist advice where we could refer on or get signed off by someone who is suitably qualified in the specialist area. Seems simple to me, but that wouldnt make huge profits for the CII and others would it?

  63. paolo standerwick 8th October 2010 at 10:21 am

    The reason for the RDR implementtation is mainly and probably due to the FSA running out of useful jobs. Thats the reason for so many cosk ups. They are digging up useless work for themselves as there is not that much to do! typical civil servant attitude with no recourse or accounntability.

    If we look at their record, what have they actually done that is of ay use?

  64. At long last we have somebody that understands the plight of the established and experienced IFA, whose main aim is to deliver a quality and continuinig service to his clients.

    Having been an adviser for over 40 years with a large and productive client bank I am fearful of the impact of RDR and at the age of 62 I hate the thought of these exams. After all, why on earth should I need to provide yet further qualification confirmation that i am able to do that which I have been doing for 40 years.

    I just hope that Mark Garnier’s initiative gains momentum and those around him in Westminster start to grasp the extreme impact of RDR and how detrimental it could prove to be in delivering quality financial advice to the general public.

    If the commission/fees argument could be sorted and grandfathering be introduced I really do not think that there is an IFA in the country who would argue against the basic RDR concept of professional qualifications. But the undue haste that is being required will mean that many thousands of IFA’s will go out of business, with the capital value of the businesses they have built up over the years falling to nothing and millions of clients will be disenfranchised.

    Well done and thank you Mark Garnier and hopefully you will indeed be listened to.

  65. I strongly agree with this. I am 64 with 46 years in the business. Taking exams at my age is difficult but I am taking them. I would be relieved if I didnt have to do so. I think thousands of IFAs will have left the industry in 2013

  66. Simon Hoadley IFA 8th October 2010 at 10:48 am

    Well done Mark Garnier, at last a voice of reason.
    Please can we have the removal of Hector Sants at the top of our industry, he was almost a total failure with the FSA, Any changes to our industry lack credibility all the time he is involved.

  67. Oliver Smith Boyes 8th October 2010 at 11:03 am

    I could not agree with Mark Garnier more. Recently I heard Richard Taylor of the FSA’s Retail Distribution Team speak at a seminar. From questions asked he is aware that the majority of complaints arise from activities of the Banks and that although the RDR will include Banks it will have no effect on their practices.
    He is also aware that the staff at the FSA are woefully unqualified but considers it reasonable to make us be even more qualified.
    He thinks that ensuring we, Advisers, use even more asset classes in our recommendations is a good idea. I went to a seminar this week about Exchange Traded Funds. I would guess that none of the advisers knew what they were when we started nor when we finished. But I will never be able to justify researching 2000 ETFs for a possible £5000 investment for one of my ‘little old lady’ clients. Not unless my fees are extortionate.
    Then he said the FSA has evidence from over 20 years of commission bias affecting sales. But the FSA has not been in existence for 20 years and at the Equitable Life enquiry it said on oath that it had nothing to do with any previous regulator. Strange that. And where is this evidence in any case? Is it published in their annual report? What report? Has it been collated for the RDR? No, it does not exist, nothing written down ever happened, that is what we are told at complaint reviews.
    Finally what got my goat more than all of the above was his most frequenlty used phrase, “I think what we are saying is…” After a review that has lasted 3 years already, is not finished, and has to be implemented within less than 15 months, do the FSA not know yet what they are thinking? No comment.
    I would love to display my name at the end of this piece but dare not due to the arbitary functioning of the Regulator.

  68. This all started when Stourport Independent Financial Adviser Mike Jeacock arranged a meeting to address RDR concerns on the 11/09/09. The meeting was chaired by myself and attended by 20 other IFAs including Neil Liversidge, Julian Steven and others too numerous to list. Representation were made to the effect that the FSA Retail Distribution Review would destroy independent advice and its provision to the mass market.

    Three Conservative MPs attended:
    1. Harriett Baldwin
    2. Mark Garnier
    3. Robin Walker

    All have strong backgrounds in the financial services sector and all continue to support the IFA cause.


  69. I tend to agree with John B – The customer is the one who is going to lose big time they are going to have to pay through the nose to a cartel of 4 or 5 large players.
    The FSA has been one of the most profligate spenders for the least results of any UK quango.
    In fact it is / was so badly managed that it had to borrow £200 million on overdraft from 2 banks just to carry on last year. Strange how one of these has the highest number of complaints upheld against it but still is not brought to account or perhaps not?

  70. Banning commission will not take out of the system the crooks, cheats and liars, the implementation of the FSA was meant to do with tighter regulation, which has only achieved the objective of self growth of the FSA leviathon, to no consumer benefit

    Commission is a useful tool whereby clients can spread the cost of advice, which due to the time spent in implementing the edicts and systems put in place by the FSA has increased exponentially, again with very little consumer benefit.

    I am not against getting better qualified, we tend to languish in a comfort zone and it is only with an impetus to gain more qualifications that we become more professional and better regarded by the public, what I object to after 20 yrs as an IFA is this sort of kill the IFA sector approach the FSA has adopted, by setting such a miserably short time scale and taking away a very consumer friendly and popular method consumers use to pay for advice.

  71. It is truly refreshing to find an MP, and one with a position on the influential TSC, making commonsense comments regarding the RDR.

    This has never been an argument about fees v commission or whether qualifications make sense, it is about commonsense and the avoidance of a miscarriage of regulation.

    There are numerous business models out there – fee, commission, fee and commission – and there are no rights and only a few wrongs. Surely we all agree that taking 8% on a bond (as the Britannia B Soc was doing) is morally wrong and indefensible. If correct then the problem is not of commission but of morality and morality cannot be regulated because the immoral will continue to find ways of raking in profits no matter what the system in place.

    The question of grandfathering is also one of morality. Mr Bamford may poke fun at the terminology but insisting that existing experienced advisers achieve additional exam passes (or some equivalent) is wrong on so many levels –wrong morally, wrong under human rights law, wrong in terms of consumer detriment wrong in that it highlights past regulatory failures for which the adviser is made to pay.

    No other profession requires existing members to achieve higher qualifications – all such changes only relate to new applicants. They all use CPD to achieve the desired improvements. The FSA could very easily achieve the required outcomes by using the existing CPD and permission system. Similarly, they could retain commission as a means of encouraging advisers to prospect for new clients but apply a cap so that immoral percentages are outlawed.

    All of the above will achieve the desired outcomes at a fraction of the billions that the RDR will cost and, more importantly, without removing a raft of experienced advisers and disenfranchising their clients.

  72. David L Williams 8th October 2010 at 12:30 pm

    Nice to see a member of the legislature taking this on board. However, I would counsel against taking this stance on the grounds of injustice to IFAs as this is not a primary concern of the Treasury or the FSA and does not actually fall within its remit.

    The real issue is the massive public detriment which will inevitably accrue as a result of the loss of up to one third of IFAs. This can only reduce competition and place a greater proportion of savings under the direct control of large, direct selling institutions and drive up costs to the consumer. Since the FSA is tasked with ensuring a healthy competitive market for pensions, savings & investments it is difficult to see how the effect of RDR can be reconciled with what is one of its primary aims.

  73. Hopefully Mark Garnier has the ear of other Treasury Select Committee members and gradually their colleagues in Parliament will look very carefully at the honourable roll IFA’s have amongst many millions of constituents. The constituents have never ben asked about RDR and to my knowledge none of them know what is being done in their name

  74. Gareth Fatchett 8th October 2010 at 4:45 pm


    There are a number of legal grounds to challenge the inequity between one profession and another.

    Let us get the judicial review of the FSCS out of the way first.

    I suspect many of the “naysayers” will tell us it is not worth it. Having said that, most of the “naysayers” would suffer under RDR.


  75. Will he wonder why he said what he said after reading the comments on here? Some complete numpties from both camps.

  76. Have we have found one sane man in the City & Westminster asylum? Fees to pay advisers on top of Child allowance withdrawal to the sector we all target – I don’t think so

  77. Fact – RDR and its contents were decided on unilaterally by the FSA without research and by people without experince or qualifications relevant to IFA’s.

    Fact – the vast majority of IFA’s are salesman and those that aren’t have forgotten this fact and are now pseudo investment advisers with inadequate knowledge or qualifications (current IFA exams including the current diploma are not enough to give this type of advice) and charging fees for the investment ‘advice’ they give. (Very dangerous position in ny view).

    Fact – the normal client who the bulk of us deal with does not want to change the system and has not been asked what they want.

    It is sad that many IFA’s will leave unnecessarily come 2013 as the pressure mounts from on high to get more and more qualified with largely useless qualifications which, as has been mentioned, become out of date as soon as you take them. We will all be asked to retake exams again and again, otherwise the CII and others will have a very reduced income post 2012!

    RDR should have been scrapped, but it is too late I fear.

    Politicians who really understand our position are rare so of course it is stunning to see such utternaces, I just think it is far too late.

  78. Mr Garnier please fight our corner for us. Grandfathering in this instance is a must. I am on the fence as whether I stay in the industry. This will be a loss to financial services and my clients will have to seek alternative advise. Due to the majority of them being working class ie not high net worth, they will not be able to afford independent advise. This is not only because the majority can not afford it but the remaining IFA’s will be in such high demand that their fees will rocket. This means one thing internet sales will rocket, ie no advise. Some will not bother. The remaining will go to the bank, god help them. Then the goverment will realise they made a mistake, by then it will be to late and good knowlegeable IFA’s would have left the industry.

  79. Sincere thanks to Mark Garnier his comments/views are to be applauded and supported.
    The FSA are on a different planet and simply will not accept that the majority of Clients will not, or can not afford to pay Fees.
    Shame on the FSA – Mr Hoban are you listening ?

  80. Judging from the level of responses this seems to be just a politician saying what people want to hear. Just grow up guys, take your exams, prove your competency and lets get on with providing a good service to our clients. If you can’t pass the exams ask yourself the important question.

  81. I applaud the comments and hope that this argument gathers pace before the IFA industry disappears for good, I believe RDR is in essence unlawful and I, like lots of my colleagues ae considering leaving the industry at th end of 2012 if this issue is not resolved. I believe the long term answer is to have more qualified Graduates entering the industry with professional qualifications with the older Advisers holding their hand so that they can benefit from their experienceof dealing with Clients and people skills.

  82. Anonymous | 9 Oct 2010 1:27 pm

    Judging from the level of responses this seems to be just a politician saying what people want to hear. Just grow up guys, take your exams, prove your competency and lets get on with providing a good service to our clients. If you can’t pass the exams ask yourself the important question.

    Passing exams proves nothing, the content is largely irrelevant to most of the advice we give and if you are happy to fund the CII’s existence, I am not!

  83. To Anonymous 9 Oct 1:27 pm who says:

    “Just grow up guys, take your exams, prove your competency.”

    I think you will find many who have posted here are in fact taking their exams. However, exams do not prove competence and it is morally wrong to retrospectively ask an already qualified person to re-qualify or lose their livelihood. It seems to me that self interests drives many toward a pro RDR position as they see massive benefits to be had from the decimation of thousands of good ethical advisers who have never harmed their client and whose only failing is an inability to gain a certificate!

  84. “Anonymous | 9 Oct 2010 1:27 pm

    Judging from the level of responses this seems to be just a politician saying what people want to hear. Just grow up guys, take your exams, prove your competency and lets get on with providing a good service to our clients. If you can’t pass the exams ask yourself the important question.”


    Couldn’t agree more. The exams are reasonably straightforward and shouldn’t be difficult for advisers who already possess a reasonable level of technical knowledge. Those that don’t possess this knowledge simply shouldn’t be permitted to provide financial advice to Joe Public. After all, you wouldn’t take legal advice from an individual whose only qualification was equivalent to an A-level in terms of intellectual demand. Why, then, should it be any different with financial advice?

  85. As Simon Mansell says, many of us who object to what is being done are/were arctually studying for Level 4, but as others have said many of us are rapidly coming to the conclusion, that if we are effecticely going to requalify to do what we have done for most of our working lives, with much of the syllabus opinion (Ethics) or hard facts we don’t need for our clients, we might as well go and do something in a totally different subject.
    I think I might do a degree in politics… or war studies combating state terrorism as they are so closley linked. “Be afaid, be very afraid”. Sound like bullying to me for which we have to pay fees to the FSA to pay off their own bullied staff.

  86. In the words of barrister Peter Hamilton:

    Following the RDR, the FSA is intending to raise professional standards and to introduce new rules for the qualifications for IFAs. So far so good: no one would complain about the raising of standards if there is reasonable room for improvement. But the FSA is saying that it will not permit IFAs who are currently qualified and authorised under Financial Services and Markets Act to continue to practice under the future new rules unless they requalify. To put it in the jargon: there will be no grandfathering. There are good arguments for saying that that is not lawful. The FSMA does not permit the FSA to cancel an authorisation simply because the FSA has changed its views on what the appropriate qualifications should be. To give current IFAs time in which to requalify is to mitigate the situation but it does not make lawful that which is unlawful. It is one thing to impose new rules on new entrants to the IFA profession. It is quite another thing to disqualify someone who is currently qualified. In other professions, the initial qualifications for admission to the profession may well be raised for new entrants, but it is standard practice for existing members to be permitted to continue to practice without having to requalify. To take one example, the examinations for those seeking to become barristers have become much more demanding over the last 40 years, but no barrister who qualified under the earlier rules has been required to requalify under the later requirements or face expulsion.

    Every professional needs to keep up to date with relevant developments. Formal requirements imposed on existing members of a profession to undertake courses designed to keep members up to date are acceptable and are part of a profession’s seeking to maintain standards. But that is not the same as requiring an individual to requalify for membership of the profession because new entry requirements have been introduced.

    The FSA needs to understand that part of the implicit bargain it has with those it regulates is that it will carry out its job fairly. It should treat its customers, the regulated community, as fairly as it expects the latter to treat their customers. Before imposing a rule, it should think carefully about the inherent fairness of what it is doing and its duty as regulator to act in a way that upholds the rule of law.

  87. It may be worth reminding ourselves of a few facts:-

    1. The Cost:Benefit Analysis on which the FSA based its justification for the RDR has been found subsequently to have been massively and very probably deliberately skewed. Had the first one undertaken produced a true set of conclusions, it would have been very much harder for the FSA to justify the RDR (assuming it would have considered itself under any obligation so to do). Now the truth has come out a couple of years down the line, the FSA has, in effect, merely shrugged its shoulders and declared Tough S**t, it’s going ahead anyway. What a great bunch of guys.

    2. Given the FSA’s love of blowing tens of millions of pounds of other people’s money on outside consultations, was any effort made to establish whether or not there is any causal link between lack of higher qualifications and poor advice (leading to poor consumer outcomes and thus a higher level of customer complaints than might otherwise be the case)? Look at the data for an answer to this one.

    3. The only way to tackle the FSA on these misguided and pernicious injustices is head on in a court of law. Even the banks are embarking on legal action over the FSA’s new proposals for reviewing their PPI sales and complaint handling processes, on the grounds (amongst other things) that hindsight reviews are illegal ~ which, of course, they are, but it isn’t until now that the IFA sector has had a champion in the form of Regulatory Legal which we hope will enable us to achieve collectively what we never could individually.

    4. One of the greatest strengths of the IFA sector is its diversity. A customer can go to either a commission based adviser, a fee based adviser, a large national, a small regional practice, his local sole trader or to a practitioner recommended by a friend or acquaintance. All those organisations will operate in different ways and I see nothing wrong with debates of diverse opinion in the industry media. Nick Bamford may sometimes seem to be a bit moralising and opinionated, but no one would question his professionalism or integrity. He just operates in a different way from many of the rest of us and appears fortunate enough to be able to attract clients willing to pay fees. Such exchanges don’t signify division or confrontation, just different approaches to doing the same thing. The FSA however seems to see this as negative or unhealthy. To me, it seems to me to be like a feeble excuse to justify hammering the IFA sector into oblivion and against that we must all fight.

    There, got that lot off my chest. Time for a smoke now.

  88. If these comments by Mark Garnier were listened to it could mean the revival of a once great industry before the savings gap increased as a direct result of Regulation extending its own empire. Regulators are changing the business model without any experience or qualifications themselves and with a minimum of consultation (and none with the people who matter who are our clients !!). Chris Budd is entitled to take his remuneration in any way he chooses but the bald statistics mean that because he is in an very small minority of advisers who claim to be paid entirely by fees the financial services industry will founder and the savings gap increase. Clients prefer to use the commission route and any survey confirms that. As to Chris making insulting comments about qualifications NO other profession has to take exams again once they are qualified or be deprived of their living. Chris, first know the people and their qualifications before making generalisations. CPD is everything for existing advisers – Let the industry apply new entrance requirements by all means and let it continue to assess CPD – but not at the expense of putting people out of work who do not have the time to run a business and take further exams in their 60s

  89. Mark Garnier MP deserves canonisation! 13th October 2010 at 5:40 pm

    This regulator is despised with a passion. They over regulate those not in need of regulation and fail to regulate those most in need. In the very year of the banking failure they even awarded themselves a £20m bonus! They consume our fees like a black hole consumes light and in return they spew out meaningless less clap trap like TCF and RDR. Business men and women of some 20-30 years business standing were lectured by spotty faced regulatory youths on how to treat customers fairly. An insult magnified by the total lack of TCF on the part of these regulatory Nazis and yet no one has the bottle to challenge these people. They will tell you that RDR followed industry consultation – don’t believe one single word of it. There were NO consultation only FSA template questions designed to elicit the answers they wanted to hear. They have pushed the IFA community to the very abyss where now upwards of 10,000 men and women are about to fall over the edge and these same people are expected to simply go away and die a financial death.

    Mark Garnier MP doesn’t only deserve praise for these words he deserves canonisation!

  90. Most IFAs are general practitioners who are already qualified.
    RDR has never been justified and the FSA has never produced any evidence to support it.
    I have no problem with anyone wanting to study further to increase their knowledge, eg accountancy, business management etc.
    Commission declaration is already transparent.
    Most of my clients are opposed to fees.

  91. As soon as a group of individuals unconnected to the industry (the politicains) hear the same arguements that have been put to the FSA, they arrive at a completely different conclusion. How can that be? Afterall, the FSA is an organisation made up of very, very highly paid intelligent individuals. Its almost as though they have an hidden agenda. Can anybody think what their agenda might be?

  92. This argument is not new …as one of the people who submitted this argument to the treasury select committee as to why the RDR should not go through.. they were totally ignored by the FSA who said that it was going to be 2013… as it stands and that is that. Too little ..too late! Where have you all been?

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