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Topics: FSA| personal accounts| Nigel Waterson MP| AIFA| RDR
People who really need good financial advice risk being shut out by FSA-led industry reforms, shadow pensions minister Nigel Waterson says.
Speaking at the Association of IFAs (AIFA) annual dinner last night, Waterson pointed to research suggesting only 51% of people currently receive advice, "a luxury not everyone is able to afford", he said.
However, he argued RDR proposals to change the current system and increase access to advice could backfire.
"There is a risk advice will become more expensive rather than more accessible," he said, reiterating the same fears often voiced by AIFA director general Chris Cummings.
Waterson said to avoid this, the FSA needs to "better define the outcomes of the RDR" with a priority on greater customer engagement with advisers.
"There is no substitute for face-to-face advice", Waterson said.
He added higher qualifications for those working in the industry are a secondary issue, and should not necessarily "take precedent" over on-the-job training.
On Personal Accounts (PA), which he dubbed "the new kid on the block" and which has become a key policy battleground between Labour and the Tories, Waterson was critical, saying "more savings and not more savers" may be the only outcome.
"No-one is queuing up to give advice on Personal Accounts, not the Government, not the Government-in-waiting, no one", he said.
This advice "gap" over the pension reforms could lead to counterproductive levelling down and damage to existing schemes, said Waterson.
He also advocated divorcing Personal Accounts and auto-enrolment.
"There is no reason for PA and auto-enrolment to be umbilically linked," he said, adding auto-enrolment could be implemented as a "soft launch" to test the Personal Accounts Delivery Authority prior to 2012.
"I agree with AIFA: auto-enrolment should be based on how customers behave, not how they should behave," he said.
He also called for a "grown-up" debate on defined benefit (DB) schemes which share risk across employers and employees, and for annuities to be scrapped unless they can be made more flexible.
"Too many people are still not shopping around for annuity deals, but this rigid requirement to buy an annuity by 75 should be made more flexible or scrapped," he said.
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At Last!
At last a little common sense being shown by someone who could make a difference! The people who will lose out from RDR are the ones who need advice the most! FACT! Those who can afford to pay monthly for advice are amongst the small minority in this country and realistically could "afford" to have even bad advice. However Joe Public will NOT pay for advice and will do 2 minutes browsing the internet or ask his Aunty Joan and make the wrong decision! FACT! Make a difference! Lobby your M.P. NOW!!!!!
Posted by: Steve Rodley
Light in all this darkness!
Thank the Lord we have an MP with a head on his shoulders and brain in it that works! Mark Hoban now needs to show his support for this stance!
Posted by: SIMON MANSELL
Wow
What just happened? Have I woken up in an alternate reality? Since when did politicians start making common sense speeches? Let's hope he can still talk common sense when they get into power.
Posted by: Chris Glen
RDR no more
Before RDR can start the ABI, FSA and any other interested parties will have to persuade 26 other European countries that commission payments for advice will be illegal. Does anyone really, honestly think RDR will happen?
Posted by: Ken Durkin
Common sense
Yes at last if only we could believe this chap is going to support his comments with action!!
Posted by: Russell Roberts
At long last
What can I say? A man who seems to know that this RDR will value no-one but the FSA. The majority of clients have been with us for years building up small/medium fund values they can't afford to pay for advice; who is going to help them - the banks - RIGHT - I think not!!
Posted by: Lorraine
Goodbye Angela....
Hallelujah! Get your coat Angela Eagles, and have a joint RDR / Personal accounts shredding session on the way out! Mind you, by the time they are in power Nigel will probably have been shuffled around to be minister of silly walks or something…..
Posted by: Jeff
THERE IS A GOD
Give Mr.Waterson his expenses account back!. Thank God somebody has seen the light. An MP - on OUR side?!!!. I am still in shock. Great news. Well done sir. You must surely have the support of what few IFAs are left.
Posted by: Keith Jayne
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