1 Aug 2011
So what do IFAs think of the TSC RDR Report which was published on 16 July? Panacea conducted a TSC RDR survey to get a snapshot view of reactions to the report from financial advisers. The survey, which has attracted numerous comments to each question, was conducted between 19th & 31st July 2011 and these are the results from 125 respondents.
Given the FSA’s initial dismissal of the some of the recommendations which lead to Andrew Tyrie MP, chair of the TSC, writing to Hector Sants at the FSA expressing his displeasure, it is hardly surprising that 79% of respondents thought that the FSA would take no notice of the report!
Comments such as “the FSA cannot be directed or told what to do because the freedom afforded to it by the drafting of FSMA 2000 has ensured that it can operate free of the constraints that restrict every other quango or organisation within the UK” sets the mood of IFAs well. One conspiracy theorist thought, “They have a (not so) hidden agenda to remove the IFA”.
Two thirds 66% of those surveyed thought a delay would have a positive impact upon their business, whilst nearly, one view was that “this would allow more time to obtain the required qualifications whilst continuing to service my clients. It would also allow more time for the education of the public about fees” 23% of those surveyed said it would have no impact and only 11% said it would have a negative impact.
Seven out of ten IFAs thought it would be more prudent for the FSA to wait for the European Commission to set out its Packaged Retail Investment Products (PRIPs) legislation initiative before implementing RDR compared to 14.5% of IFAs who disagreed.
More than half (56.5%) of respondents though that there was a good balance in the report between the need to improve professionalism via higher qualifications and 'grandfathering', whilst nearly a third (31.5%) disagreed and 12% were undecided.
One IFA commented, “Feelings and understandings of the clients do not always follow the rules. If they did we could produce computer programs to remove the need for IFAs altogether. Trust can only be established over time through experience and not through achieving exam qualifications”.
A staggering 62% of those surveyed felt that the RDR was not good for the consumer, compared to 27% who thought it was and 11% did not know.
Two thirds (66.9%) of IFAs felt that they would lose clients from moving from a common to fee based model compared to a quarter (25.8%) who felt that it would not affect their business.
Nearly nine out of ten IFAs thought the FCA would simply be a re-badged FSA and most (94%), this view is one it would appear is supported by the FSA too as one IFA said that “their road shows give the impression there will be a strong correlation between the two”.
94% felt that the FCA should be accountable to a higher authority, such as Parliament or a watchdog.
Finally 55.6% felt that the TSC recommendation on the longstop missed the mark and comments made suggested that the longstop is enshrined in UK law and as such should apply to all irrespective of occupation.
Commenting on the survey results, Derek Bradley, ceo of Panacea, says:
“Would a 12-month delay be good news? Yes. Despite many IFAs being RDR-ready or about to be, this is a victory (although possibly Pyrrhic if the FSA chooses to ignore the recommendations) for those brave individuals who were prepared to stand up and fight what many saw as a bully tactic from the FSA.
“If the regulator listened to the TSC, it would allow more time to qualify, time for FSA reflection and time for the Financial Conduct Authority and the EU to develop their future plans in tandem. And, more important, it will allow more time for firms to get up to speed with the new fee-based world that approaches.
But remember this whole report counts for nothing if the FSA chooses not to act and its initial response was not a good one. If it fails to listen, I would expect to see a very fiery response from Parliament.”
To see the full results and comments to questions click here
Thanks to all of you who too the time to complete the survey, the results are only a snapshot of opinion but they carry some weight both in sentiment and balance of view, something that has been lacking in the entire process.
The results will be passed on the AIFA, Mark Garnier MP and the ABI. Will a sense develop that a more pragmatic approach should prevail, will the FSA take notice, will the longstop re-instatement se the light of day?
If not, the only solution I suspect is to press Ctrl+Alt+Del!