Treasury select committee chairman Andrew Tyrie is pledging to keep up the pressure on the FSA after the regulator swiftly dismissed the committee’s recommendation to delay the RDR by a year.
Last week, Tyrie wrote to FSA chief executive Hector Sants to express his anger over the regulator’s decision to reject the TSC report’s key recommendation in an embargoed press release published alongside the report.
Sants responded the next day, assuring Tyrie the FSA is taking the report seriously and suggesting the FSA will soon be publishing guidelines for eligibility for waivers from the RDR as well as considering “further mitigating action” to help IFAs meet the RDR deadline.
In an interview with Money Marketing following publication of his letter, Tyrie says he will use the authority of the houses of Parliament to hold the FSA to account, even if it cannot force the regulator’s hand.
He says: “The death of Parliament has been greatly exaggerated and this will not be the end of the matter. I have no doubt that when we next see Hector and FSA chairman Lord Turner this is an issue we will want to raise. We were very disappointed.”
He says the intentions of the RDR look “broadly right”, but that it needs to be implemented carefully to ensure the advice community and the interests of savers are not damaged.
He says: “We are asking the FSA to think again, to show some common sense. With some adjustment, we think the proposals may be appropriate but now we need to implement this with great care and it is with that in mind that our recommendations have been framed. We are talking about IFAs’ livelihood and thousands of savers who may be disadvantaged if we get this wrong.”
Tyrie adds that the FSA’s behaviour is a good example of why the committee has launched an inquiry into the accountability of its successor body, the Financial Conduct Authority.
He says: “It tells us so much about what people privately tell us of the FSA – that it simply does not listen enough. There should be someone keeping an eye even on powerful regulators. Everyone should be account-able to somebody.”
The TSC’s report on the RDR, published earlier this month, calls for the January 1, 2013 implementation date to be put back a year to give advisers more time to meet the QCF level four qualification requirements, alongside a softening of the cliff-edge deadline for experienced advisers.
The FSA released an embargoed response alongside the publication of the report stating the regulator “remains committed” to the January 1, 2013 deadline. Tyrie’s letter to Sants says: “We deprecate the authority’s action. It was precipitate, giving the impression that no adequate consideration had been given to the arguments for the delay we recommend. This is unacceptable.”
Sants’ reply says the FSA’s response should not be seen as a rejection of any element of the report. It says: “Rather it was intended simply to ensure the momentum behind the preparation for the RDR is not lost.”
In last week’s Money Marketing, Treasury select committee members attacked the regulator for showing “arrogance” and “contempt” for the committee’s work.
Online comments on Treasury select committee call for a year’s delay to the RDR
The RDR is a bit like jumping off Niagra Falls. I could be ready and prepared by the end of next week but as a businessman, IFA and being genuinely interested in what is best for the consumer, if you think the jump is just plain stupid it is very hard to be motivated unless you are a lemming, which is what the FSA thinks we are.
I am well down the examin-ation road and still object to my 32 years of sterling care of my clients being disregarded by the RDR but a 12-month delay in this climate seems eminently sensible to me, no doubt, the very reason the FSA will again dismiss it out of hand after “careful” consideration.
This is all just a show, with the Treasury select committee having no say or power to do anything but it looks good from a public point of view. The FSA knows the TSC cannot do anything but humours them with its comments and just carries on as before.
The select committee’s request to delay the RDR is reasonable. If the RDR is implemented on January 1, 2013, there are bound to be many more advisers, some very experienced, who leave compared with the number leaving at January 1, 2014. The FSA says it announced the deadline some time ago but it took a long time to finalise the rules.
Unfortunately, the TSC missed the point, they were blinded by all the complaints about qualifications instead of focusing on genuine reasons for a delay. The FSA must have been mightily relieved when they read the TSC report. The one thing that has been constant is the need to demonstrate your knowledge, so why make this the main justification for a delay? Yes the FSA have shown arrogance in their pre-emptive response but the industry and the TSC shot themselves in the foot.
Some advisers are finding it difficult to juggle all the requirements while still trying to run a profitable business. When the RDR was first mentioned, we never thought there would be a global financial crisis. This has had a financial impact on advisers businesses with regard to overall profitability. This has created very difficult and challenging times for every-body, so a one-year extension on the implementation in my mind is not such a bad idea.
Just who does he think he is asking the FSA and old Hector to show some common sense, Paul Daniels?
Failing to adequately assess where the actual misselling comes from and introducing all-encompassing rules and parameters rather than adequately performing regulatory function is why we are where we are.