25th July 2011

Be careful what you wish for!

Early last week the FSA responded to the recommendation to extend the RDR deadline by saying “it remains committed to implementation from January 2013” and will provide a formal response “in due course”.

On hearing this I was reminded of the famous Blazing Saddles exchange between Hedley Lamarr and work gang boss Taggart

Hedley Lamarr: "My mind is a raging torrent, flooded with rivulets of thought cascading into a waterfall of creative alternatives".

Taggart: "God darnit, Mr. Lamarr, you use your tongue prettier than a twenty dollar whore".

What is going on here and who is the Twenty-dollar whore? Mark Garnier says: “The FSA should not start with the point of view that it will ignore us, but there is not a lot we can do if it does. If it wants to ignore us, it can.”

Garnier says: “In the crisis, the FSA was accused of being asleep on the job. We want to make sure the accountability and governance of the new regulator is such that this type of failure does not happen again.”

Well in truth, the TSC cannot do too much itself although they are rightly upset. There are too many political battles going on, many behind the scenes. Parliament is rightly intent on seeing consumers protected (from themselves maybe in some cases it is true?) and it wants to do so as soon as possible.

To assist in the process it has initiated the formation of the CPA although this looks like a rebadged FSA to many and it is this body that will see the result of accountability and not the FSA. I do not think there is enough Parliamentary time to deal with FSA accountability and Mr. Sants knows that only too well.

But if pushed by a blatant defiance of an important Select Committee recommendation we may yet see the power of Parliament put a hold on that ‘pretty use of the tongue’ by Mr. Sants.

The RDR has its critics and its champions and the mixture of who sits where is almost surreal. It now appears that Providers are broadly supportive of the RDR deadline retention, mainly due to the huge amount of time, money, redundancies and resource that has been dedicated to it. But they must know that making money in the post RDR world will not be easy and could see more of their number disappear

Those IFAs who wish to move into the brave new more ‘Professional’ world of qualification bar raising and fee charging are keen to see this stay on track. This is because they are often younger IFAs who have found study easier than their older more experienced colleagues and have not yet built a business of any significant value and longevity to see any exit strategy impaired by this.

The older IFAs see that professionalism and qualifications are no bad thing but surely experience should count for something too? THE most affected by retrospectively applying new qualification levels are by the older IFAs who are now seeing years of value in their businesses being destroyed as their exit route is about to be cut off.

I cannot recall a situation where so many are affected by the actions of so few at such a high cost.

The industry RDR debate is almost an anesthetic now and many feel it is time to move on. But some battles are often worth fighting, especially those relating to fairness. Even the FSA have a recognition of sorts of that even if it bound up in TCF- something that does not generally receive regulatory reciprocation toward those it regulates.

We should, when considering where we are with RDR and where the FSA goes from here, reflect upon the wise words of Albert Einstein who said “any intelligent fool can make things bigger and more complex... It takes a touch of genius - and a lot of courage to move in the opposite direction.

The time has come for courage, but on whose part, the FSA, TSC, or Parliament? Andrew Tyrie has started the process with an unprecedented letter to Hector , who will follow?

What is so wrong with a year’s push back? It could well protect us as an industry from ourselves before we regret that what many have wished for comes true.

What do you think about the whole RDR TSC review, take our quick survey now and have your say the results of which will be passed to Mark Garnier MP, AIFA, CII and the ABI.

FSA/FCA, Panacea Comment