So, Lloyds Banking Group has followed rivals Barclays and HSBC in pulling out of mass-market tied advice.
Perhaps the most surprising thing is that it has taken so long to figure out this type of business is unsustainable given the new charging rules being introduced by the RDR.
The heavy lobbying for a more permissive simplified advice regime failed earlier this year when the FSA refused to budge on liability, qualifications and adviser charging rules in its final guidance.
I wonder though how much the views of certain people at the FSA have changed since then and whether they will change further in the months and years ahead.
New Financial Conduct Authority chief executive Martin Wheatley has had time to get his feet under the table and it is understood some senior management at the regulator have been rattled by the negative coverage of the RDR across much of the consumer media.
Instead of hopeful headlines about a new-era of beautiful, transparent advice, the focus for many personal finance journalists has been on concerns that many of their readers will be left unable to receive any form of advice. Headlines about the thousands of jobs being lost as big firms shut down their tied-advice operations will not have helped.
Coincidentally, Money Marketing today also broke news of an industry group made up of the Association of British Insurers, Association of Mortgage Intermediaries and providers such as Lloyds and JP Morgan who are looking to push a “basic advice plus” regime.
The proposal would see advisers being able to offer advice on certain products with only QCF level 3 qualification required and with commission allowed.
The group was asked to present its proposal at this year’s Gleneagles summit, the same annual event where the RDR was born a few years back. The idea bares a passing resemblance to one of the RDR advice streams originally proposed by the FSA (primary advice anyone?).
One of our columnists suggested to me this morning that this was a “Custer’s last stand moment”, a forlorn attempt by the “dinosaur brigade” to deny the inevitable.
I’m not sure the opinions of Peter Williams, who has spent most of his career pushing the need for higher professional standards, and former Aifa director Rob Sinclair can be dismissed so easily.
While problems around consumer access to advice are nothing new, it is likely the RDR will create big challenges for policymakers to deal with in the future. There may have been plenty of things wrong with the advice model of the banks, but is pushing mass-market consumers to non-advised services with no protection if things go wrong really a better answer? This is also the polar opposite of the advised-only regime the FSA plans to introduce through the mortgage market review.
Tucked away in one of Martin Wheatley’s recent speeches was a rare and welcome acknowledgement from a regulator about the need for people to save more and protect themselves and their families, and the dangers to individuals and society of not doing so. You would be hard pressed to say current regulatory policy is helping to achieve these goals. Quite the opposite.
Lee Robertson, chief executive of wealth management firm Investment Quorum, this afternoon sent out a comment to journalists that seems to sum up the feelings of many:
“As an independent I don’t exactly champion the kind of advice offered by the high street banks, but I do believe in the provision of a national advice structure capable of delivering financial advice and assisting hard pressed families with their long-term planning and product purchases.”
“Whilst many (bank advisers) who have gone arguably deserved to do so we do appear to be reaching a rather critical point in terms of the numbers of advisers available and able to serve the mass market. If we take account of the numbers mentioned in the recent bank announcements – Barclays, HSBC and Coutts included – and even allowing for those who remain in the sector, it is likely that this may further reduce the number of available public facing advisers.”
As an ex-bookie I won’t be rushing to William Hill to lump my savings on a last minute RDR turnaround from the regulator. But as the effects of regulatory change become more apparent, and with European rules likely to allow leeway, I don’t think you can rule out the kind of proposal Williams and his team have put forward being taken seriously by regulators in the future.
Paul McMillan is group editor of Money Marketing- follow him on twitter here