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No Time To Lose
Back in 1998-99 the Financial Services & Markets Act was debated and argued both inside and outside Parliament. Advisers failed to appreciate the impact of the proposals and did not provide much input. As a result, when FSMA came into force in December 2001 its effect was to remove the 15-year longstop defence as well as the imposition of a framework designed to remove accountability.
Twelve years on and we have an opportunity to redesign the financial services landscape. In July 2010 HM Treasury published a consultation document entitled “A New Approach To Financial Regulation” and invited responses by 18 October 2010.
Additionally, the Treasury Select Committee is calling for evidence as art of its own enquiry into the proposals. The deadline to respond to them is 22 September 2010 so little time remains.
We believe that there needs to be an appropriate balance between the interests of consumers and those of the industry. We believe that the proposed new body, the CPMA, should reject the RDR and reconsider the impact and horrendous cost – £2.9m thus far!
Make sure that you respond to both the TSC and HM Treasury. In years time you may be howling in righteous indignation but, if you fail to respond, you have thrown away your right to complain.
The HM Treasury consultation paper can be found here – ” http://www.hm-treasury.gov.uk/d/consult_financial_regulation_condoc.pdf
and he Treasury Select Committee request for evidence can be found here – http://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/news/financial-regulation-inquiry-announced/
The Retail Distribution Review – The FSA’s Very Own White Elephant
We know that the RDR will prove costly for consumers as millions will be left without an adviser due to the mass cull resulting from the draconian changes.
We also know that the cost to consumers will rise as the regulatory cost burden must be passed on to consumers.
We also know that the FSA latest cost benefit analysis suggests that the 10 year cost will reach £500,000,000. As this cost benefit analysis is 4 x higher than the previous we can only imagine the real cost once it is calculated in a truthful and responsible manner. Like the Millennium Dome it is taking on a life of its own with the cost rising exponentially and the potential grief to consumers and advisers increasing in direct relation.
The latest advice from the FSA is that, thus far, the cost to them (in other words the industry, which funds them) is almost £3,000,000.
£2,061,000 Staff
£ 249,000 IS/Project Management
£ 643,000 Consultants/ Agencies
£2,953,000
Godfrey Bloom Explains Why The FSA Has Got It Wrong
Godfrey Bloom, UKIP MEP and patron of Adviser Alliance, has delivered his view of the current regulatory turmoil.
As usual, Godfrey pulls no punches and states what many IFAs believe but are often too afraid to say themselves.
Godfrey’s video can be found at the site below
http://www.youtube.com/user/GoddersVision#p/a/u/0/hdCgARJIJ3g
FSA admits that the RDR will not cure bias
Money Marketing reports;
‘Ernst & Young has warned that product bias will increase as a result of the FSA’s restricted advice channel.
Director of financial services Robert Wood said many people will choose the restricted advice route over the independent channel.
He said: “Nine out of ten wealth managers are saying they will be restricted because they can make more money that way.
“An unintended consequence of the RDR is that product bias will increase as a result of high numbers becoming restricted. We could see a second round of bias returning to the market.”
FSA head of investment policy Peter Smith says: “Product bias will still be possible within the market but I do not think it is a feature of the restricted channel, I think it is a fact of life.
“If advisers are tied there is the potential for bias but the FSA is looking at how firms are preparing for the RDR, which could touch on this issue.
“What we expect to happen is that advisers make recommendations that are suitable for their clients. If within their product range they have not got something suitable they should say so.”
When pressed on whether that is a likely outcome, Smith says: “It raises interesting questions for the FSA about how that will work in practice and how we will supervise that.” ‘
Quite.
What The Experts Are Saying...
Martin Lewis – Moneysaving Expert says “There’s a worrying possibility that the FSA is about to kill off independent financial advice in the UK for all but the wealthy. I do hope I’m wrong!
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Janet Walford – Editor Of Money Management says “I am not paranoid enough to believe that the FSA has a hidden agenda to do away with small IFAs, but
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Robert Kerr, Head of Retail Distribution Development at Scottish Widows says: “The RDR could have the unintended consequence of “disenfranchising” the majority of consumers from financial advice.
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Recently formed IFA lobby group Adviser Alliance is fully operational and accepting members.
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