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Wheatley: Simple plans to bridge advice gap

Financial Conduct Authority chief executive designate Martin Wheatley says he hopes simple products and simplified advice will bridge the advice gap for people with small pension pots after the RDR.

Speaking at an Age UK event in London last week, Wheatley said: “Charging for advice is there today, it is just hidden. It is right that in a model where charging is made more explicit, people with relatively low-value assets may not have access to the same advice they had in the past. What we are hoping to see is more simplified products that can be sold on a simplified advice or non-advised basis.”

A steering group set up by the Treasury to help develop simple products began work last month, led by former FSA director and former Lloyds Banking Group chief risk officer Carol Sergeant. The group will report by the end of July.

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. At least he has the decency to admit that the lower icnome bracket WILL be hit by RDR by having reduced or no access to advice. Are you listening Hector? Do you see what you and your colleagues have done with this farsical creation? If only you had listened to industry and advisers about the blatently obvious maybe you would have
    had the sense to rethink the whole idea of RDR. Before anyone says to stop moaning I am currently RDR ready.

  2. You are a bit late in this statement. With only a few months to go why are they hoping that after RDR something can be done to sort this out? Surely it would have been common sense to ensure that this there was something in place BEFORE RDR so that these people are not left out in the cold. I can see it now – there will be so much empahasis placed by FCA on us to ensure they get their fines out there to show their teeth, that it will be years and years before this is being revisited. Eventually it will be the case that they will see it isnt working but will say ok we got it wrong buit its here now so we should stick with it. Advisers RIP.

  3. It is the same old arguement about ‘simplified products’. Most ‘ordinary’ people are put off seeking advice from IFA’s because they believe it will cost them money in fees. RDR will only reinforce that view. Term assurance is a very simple product which can be purchased via the internet or even a supermarket checkout and yet I am staggard at the number of famlies where the main wage earner is not covered by this type of simple plan. WE NEED MORE ADVISERS!!!

    At the begining of the 90’s it was estimated that 45% of all insurance policies were sold by a home service company. They delt with mainly simple products, the FSA managed to regulate them out of business and RDR will have a similar but not so dramatic effect.

  4. delusional – thinking that making financial services products simple and cheap will make people want to buy them.

  5. Here we go, anothr nut job in his ivory tower telling us what we should be doing to help the poor disadvantaged consumers. We run businesses, we do not belong to charitable organisations and don’t work for nowt.

    RDR commission ban is probably the worst solution to the problem of motivating consumers to save

  6. Sugar & Salt are both very very cheap.

  7. Wheatley said: “Charging for advice is there today, it is just hidden. It is right that in a model where charging is made more explicit, people with relatively low-value assets may not have access to the same advice they had in the past. What we are hoping to see is more simplified products that can be sold on a simplified advice or non-advised basis.”

    Hoping to see?! Jees, give me hope!

  8. Simplified Advice is a nonsensical proposition – nobody wants it from other professions such as legal or medical and no one will want it from IFAs either. As for simplified products, we’ve been down this road before and if we don’t learn from experience, we are completely wasting our time.
    If IFAs are going to provide a professional service, then they should have no qualms about charging for it. The fact that some people cannot afford to pay for it is a completely separate issue and one the FSA should be focusing on, rather than desperately trying to bung the square peg of simplified advice into the round-hole of holistic financial planning.

  9. Simplified products are already available from NS&I and in the form of plain vanilla LTA. Even ISA’s are relatively simple, notwithstanding the FSA’s obsessive preoccupation with hidden charges. Yet still there are massive savings and protection shortfalls.

    People such as Mr Wheatley talk blithely about a few more simple products bridging these gaps, yet nobody seems able to come up with any ideas for what they might actually look like, least of all the FSA which has already been kicking this particular can around for at least a year. Just what white rabbits that nobody else has managed to devise do Carol Sergeant and her team expect to pull out of the hat?

    Probably the most critical shortfall is saving for retirement, yet the government has done NOTHING WHATSOEVER to honour the Conservatives’ pre-election manifesto pledge to simplify pensions ~ in fact, it’s done quite the opposite.

    NEST certainly isn’t the answer, not least because it’ll still be governed by the dreadfully complicated rat’s nest of rules governing every other type of retirement savings arrangement. The mindset of the general public, at least the non-HNW sector, has been totally poisoned against anything and everything to do with pensions.

    So tell us, Mr Wheatley, how can you talk about (more) simple products being the solution to everything when nobody’s yet managed to come up with any? The simple facts are:-

    1. Providers and advisers are commercial organisations that have to make a profit to survive.

    2. All products are subject to a legislative framework devised and imposed by civil servants and by a regulatory framework devised by the FSA.

    3. Because the FSA perniciously denies advisers the protection of any longstop against future complaints, advisers are liable indefinitely for any advice they give.

    4. No investment products, except those offered by NS&I, which we already have, offering the potential for returns ahead of inflation, are or can ever be risk-free.

    5. The returns available from NS&I products are generally so pedestrian that they fail to excite, whilst none offers a monthly savings facility. Even the sporadically available index-linked savings certificates offer nothing more than a guarantee not to lose money in real terms.

    So just what products can ever overcome such a combination of obstacles? it will be mildly interesting to see what’s announced at the end of July, though I anticipate that at best all we can expect is a couple of damp squibs that providers won’t be interested in marketing, that advisers won’t be interested in advising on and for which consumers won’t be interested in paying fees.

    Did consumers rush to invest direct in profitless personal pensions (a.k.a. stakeholder)? No.

    Did providers who tried to market them in the hope that compulsion would lead to economies of scale achieve anything but massive losses of money? No.

    Did advisers seize on them as the next big thing on which to build sustainably profitable businesses? No.

    All I see ahead is yet another massive waste of time and OPM to come up with yet another Great White Elephant.

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