'RDR has laudable aims' The 20 best TSC submissions

The Treasury Select Committee (TSC) has not yet made a decision on whether to call for a full evidence session on the RDR as it wades through a huge 203 separate submissions on the issue.

Submissions have come in from a wide range of interested parties including: the FSA, ABI, Adviser Alliance, threesixty, SimplyBiz, the CII, CISI, FSSC, Cazenove, Lloyds Banking Group, Scottish Widows and many individual IFAs.

The TSC has been calling for submissions to scrutinise the need for the rule change.

To view volume one of the the submissions in full click here

To view volume two of the submissions click here

Top Quotes from submissions

Hargreaves Lansdown

"We believe that the RDR has some laudable aims, but has been misguidedly implemented.

"It is a concept that has swelled well beyond the realms of what was an acceptable brief. As a result, it threatens to deliver unintended consequences, bureaucracy, cost and confusion for both private investors and financial services companies alike.

"We believe it needs to be pared back to the few aspects that will do genuine good, if it is to proceed at all."

Nick Bamford, Informed Choice

"Both the raising of qualification standards and the introduction of adviser charging are very much in the interest of the UK consumer of financial services.

"The implementation of the RDR should not be delayed at all."

Lloyds Banking Group/Scottish Widows

"If the RDR simply delivers better quality financial advice to a much smaller number of affluent consumers, it will have failed.

"Our research highlights that a significant number of IFAs will move to a ‘restricted' model rather than leave the industry. However, ‘restricted' is pejorative and could act as a barrier to consumer engagement.

"Equally, the FSA must ensure that ‘independent' means unbiased and that all alternatives will be considered and the very best option recommended to the customer.

FSA

"As a result of market exit, and if new firms do not enter or existing firms do not expand, around 11% of people currently receiving advice will not have access to the adviser they are using at the moment because their adviser will leave the market.

"They can, of course, consult another adviser, and other firms may seek them out as clients. We believe that the final figure is likely to be less than the 11% identified.

"We considered grandfathering but the majority of respondents to our consultation20 were not in favour (including AIFA, the main representative body for independent financial advisers). Any grandfathering provision would have to be made available to all advisers operating in the market, irrespective of who they work for.

There was a broad consensus that grandfathering would not support the necessary efforts to restore confidence in the industry and would thwart efforts to implement demonstrably consistent minimum standards across the profession. This was the view of the majority of advisers and their representatives."

Cazenove Capital Management

"The RDR will result in only middle to high earners or those with accumulated wealth being 'offered' advice - thus leaving those who really need advice unable to access it or being educated to the fact they need it.

"The removal of commission and factoring for regular premium savers and lower income earners will mean it no longer economically viable for advisers to sell regular savings plans or pensions to these individuals.

"If the FSA wishes to continue with this approach, it must give a stronger lead on Simplified Advice, or a large tranche of society will be left without financial advice. This will be to the detriment of promoting a savings culture in the UK.

"The FSA is not listening to industry concerns on this issue. The current proposals are flawed, will degrade the term "independent" and potentially lead to miss selling of complex products as IFAs attempt to offer a holistic service in order to retain the independent title."

Nic Williams, Financial Adviser, Knutsford, Cheshire

"Should these changes occur a significant number of small IFA firms that currently look after the financial requirements of the average man, or woman, will be unable to continue to trade."

"The reason for this is those households that are on medium to low incomes will not be able to pay for the advice on a Fee basis as they will simply not be able to afford it."

"This will lead to them only being able to access advice through a high street bank or other similar institution. This will mean that the consumer, in these circumstances, will not have the choice of product providers that is currently available through an IFA."

SimplyBiz

"The RDR... is based on a combination of unfounded assertions, limited and contradictory research and as regards the removal of client choice, little more than a guess that the outcome will be better for consumers.

"Not only is there no material evidence of bias from past research but the FSA has also failed to produce any evidence that banning commission and changing to fees will improve outcomes for consumers.

"It is a guess that somehow it will provide a better result for consumers when the overwhelming evidence shows that most consumers will not pay fees and. Independent financial advice will become the preserve of the wealthy."

Chartered Insurance Institute

"Grandfathering is not necessary - it would undermine the integrity of the step-change in standards. Given enough effort and commitment now, evidence shows that the industry should be ready by December 2012.

"Allowing ‘experienced' advisers to opt out would needlessly undermine the central premise of the RDR by increasing the likelihood that inappropriate financial advice will continue.

"The early conclusions reached by the FSA still hold today - that commission has helped lead to a loss of trust and confidence in financial advice, and that the quality of advice needs to be substantially raised.

"Any watering down of the proposed professional standards would undermine the core RDR objectives of improving outcomes for consumers and delivering a step-change supported by the majority of the profession."

Harry Katz, Norwest Consultants

"I have little sympathy with the older cohort of advisers (of my age group) who complain that they face a ‘cliff edge' on qualification when any sentient being should have realised that examinations were going to become an important part of the proposition.

"I can only imagine that the reason they did not engage was either through bone idleness or crass stupidity.

"We have a Regulator who is largely unaccountable, who is a law unto themselves, who seems to have adopted the mindset of the Politburo."

Threesixty Services

"An original desired outcome of the RDR was improved access to financial advice - that objective has since been, quietly, dropped and will certainly not be met by the core proposals.

"This refusal to permit grandfathering is not only contrary to examples in other professions, it is contrary to the FSA's own practice and as such is inconsistent. Any industry or profession deserves to receive consistency from its ‘regulator'.

"There can be little doubt that the process will result in a reduction in adviser numbers and that the cost of compliance will lead to increased costs for clients wishing to receive advice."

Adviser Alliance

"The RDR represents yet another FSA initiative, following in the footsteps of Treating Customers Fairly (TCF), light-touch regulation, depolarisation, the ‘menu' and others too woolly to mention. The TCF initiative, which has been running for over five years, has yet to be analysed and we know of no extensive research establishing its success or otherwise.

"The enormous cost of the RDR, originally estimated at £1.275bn for the initial 10 years, has since soared to a potential £3.55 bn. Many commentators consider that even these astonishing figures represent an underestimate."

Derek Gair, GDC Associates

"The ordinary regular saver will NOT pay fees every study confirms this (the most recent being KPMG September 2010). Specifically, the vast majority of the population will not pay fees for advice and as a result of RDR become virtually extinct having no access to investment advice they can afford.

"Removing distribution costs(commission) from regular savings plans removes distribution - is it coincidence savings ethics in the UK were highest when advisers had such an incentive?

"It is a provable fact the most efficient way of distributing such products is through IFAs who hold the majority of the distribution and a fraction of the complaints. If there was provable commission bias, as the FSA suggest, it is reasonable to assume this would not be the case."

Alan Lakey, Highclere Financial Services

"Evidence highlighting the iniquity of commission is scant and the FSA admits that it is combating dubious thinking as much as reality. Sheila Nicoll stated, in November 2009, "We want to remove the influence of product providers over the remuneration of advisers and ensure that the perception, and indeed reality, of bias is removed.

"Revealingly, nine months later, her colleague Peter Smith provided an alternative view, "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.

"In searching for ‘financial nirvana' the FSA is demolishing the financial services infrastructure and discouraging a significant number of consumers from engaging with the industry."

Dennis Hall, Yellowtail

"The confusion over tied/multi-tied/restricted/independent has not created greater clarity for the consumer. The FSA have had ample opportunity to clean up the position regarding commission, but are instead now using a sledgehammer to crack a nut."

ABI

"The RDR will deliver important benefits and increased trust amongst consumers. The RDR will help lead to an increase in adviser professionalism by raising the minimum qualification standard. Adviser charging will create a more transparent and fair charging system. Consumers find the concept of adviser charging straightforward."

Sesame Bankhall

"We fully support the FSA's need to protect consumers, but we believe that the continuing open-ended liability from past business is an unfair and unacceptable burden on all professional firms. That is why Sesame Bankhall Group reiterates its call for the FSA to introduce a 15-year ‘long-stop' time limit on complaints."

IFA Defence Union

"We can't see the further imposition of expensive and time consuming qualifications alone preventing bad advice. In our opinion the imposition of higher and higher qualifications over the last two decades has been an attempt to solve problems which are in fact created by unethical behaviour and poor regulatory supervision.

"The main issue is the Regulators' inability to spot ‘trends' and move quickly. Further and further requirements in the area of qualifications are not going to resolve these issues because both the unethical adviser and inefficient regulator will survive, come what may."

AIFA

"We cannot support ‘grandfathering' on the grounds that thousands of non-independent advisers would by an administrative device be brought up to the level that most AIFA members are achieving through a great deal of hard work.

"The lack of a long stop means that businesses have the burden of making provision within their accounts for the increasing risk of complaints, the cost of maintaining records over a long period, as well as the proposed increases to capital-adequacy provisions.

"Furthermore, the uncertainty generated by open-ended liabilities makes it difficult for firms to be sold and also hinders their ability to attract new sources of capital."

Fidelity

"There are significant discrepancies between the regulation of different providers of products and services in the market place, which will lead to different outcomes.

"Although the consumers of these products and services see these as being homogenous, the regulatory environment will treat these differently. For example the execution-only, adviser, life insurance and mutual fund industries will all have different regulations applied to them.

"These regulatory differences will at a minimum create consumer detriment due to different client experiences, and at worst carries a significant risk that it opens up regulatory arbitrage opportunities for providers who deem an area to be less tightly regulated.

"There must be consistency applied to suppliers of homogenous products and services, as to do otherwise would produce client detriment and inefficiency."

Consumer Financial Education Body (CFEB)

"Our pathfinder also showed that there was an 'advice gap' in the UK. Some people lack the confidence to engage with the financial services industry, others do not trust it, others believe that they can neither afford nor benefit from professional financial advice.

"That gap may widen when the RDR comes into force - research published by the FSA suggests that the number of advisers and advised clients would be reduced by 11% as a result of market exit.

"Should the market for regulated financial advice become even more restricted then our service can help fill this larger gap. We will both help people who are unable or unwilling to seek independent advice as well as refer people to IFAs as appropriate."