It has been easy for politicians and advisers to attack aspects of the retail distribution review.
But, as Treasury select committee chairman Andrew Tyrie makes clear in this week’s Money Marketing, it will be harder to push forward with a palatable solution to address the huge amount of concern in Westminster and around the country.
Political pressure on the RDR is likely to increase in the new year with the Treasury select committee consultation and a promise from back-benchers to continue to highlight the plight of a significant proportion of IFAs.
The main focus of MPs’ concern has been around the anger expressed by a large number of experienced advisers about having to get new qualifications by the end of 2012 and the damage to consumers caused by a subsequent fall in adviser numbers. This led to many calls from MPs at last week’s Parliamentary debate to allow experienced advisers to be automatically grandfathered into the new regime.
But I am not sure if as many advisers or their MPs would be in full support of grandfathering in its truest sense.
The FSA believes anti-age discrimination laws would prevent it from only offering some kind of grandfathering for advisers with a specific number of years of experience in the industry.
If the regulator is correct in this assumption then it would mean, for instance, that a level 3 bank adviser with a couple of year’s experience would also have to be grand-fathered into the new regime.
If bank advisers with limited years in the industry are able to be swept through on the coattails of IFAs with formidable levels of experience would the political consensus for this option be as strong? Maybe, maybe not.
In addressing the legitimate concerns of a certain demographic of advisers the FSA and Government must not retreat from the great strides being taken to increase professionalism within the industry.
To be successful in campaigning for changes to the RDR for experienced advisers, a robust alternative must be presented to the TSC and the regulator.
If full grandfathering is taken off the table there are a number of other solutions that can be put to MPs in the coming months. These are mostly arguments that have been fought and lost before in the meandering lobbying campaign which has surrounded the passage of the RDR from discussion paper to policy. But industry folk jaded by the years of RDR debate must remember that many MPs will be hearing these arguments for the first time.
The biggest room for manoeuvre is around the current cliff-edge deadline of the start of 2013 to ensure all staff giving advice are fully qualified up to QCF level 4.
At present the FSA is loathed to suggest there may be flexibility over the RDR deadline for fear that advisers slow the pace of their journey to QCF level 4.
But many advisers are extremely concerned about passing all the exams by the current deadline to remain in business, with current pass rates at around 50 per cent or less, and a more gradual introduction of the new qualification regime for IFAs moving in the right direction would be welcome.
The issue of regulatory dividends, at one time seen by the FSA as an essential element of the RDR, has disappeared from discussion. A more gradual introduction of higher standards with specific regulatory dividends for firms that are fully compliant with the new rules, such as less regulatory visits, could be a viable route.
The FSA has already moved from its original position on examinations by allowing alternative assessments. But there are concerns over the price of such assessments, particularly if you fail the first time, and take-up is expected to be pretty low.
At a Money Marketing round table held last week, Aifa policy director Andrew Strange said the trade body would continue to push for alternative ways to assess competence, for instance taking greater account of experience and CPD work, rather than just exams or “pseudo exams”.
In the past professional bodies have floated the idea of a sunset clause arrangement where older advisers agree to leave the industry within a certain period but are allowed to continue to advise until their leaving date, potentially with stricter regulatory oversight. Could such an idea can be revisited?
There will be plenty of proposals for MPs to get their teeth into in the new year. But to win a lobbying campaign advisers must ensure any amendments to the RDR are pro-consumer and do not turn the clock back on the move to higher standards.
Paul McMillan is editor of Money Marketing- follow on twitter here