TSC submissions: The eight unanswered RDR questions

Brown's RDR

It will be ruled illegal in European law to ban commission payments in one country and allow commission payments in 26 countries. Brown's RDR, conceived in 2006 in a completely different world, is dead...

Posted by: Ken Durkin

TSC submissions: unanswered RDR questions.

Here's an unanswered RDR question. What is the logic for insisting that someone who has been Diploma qualified for 15 years, with 2,000 hours of CPD under his belt, and a total of 19 years experience, be forced to 'gap-fill'. I gap-fill every day that I come across a 'question' to which I don't already know the answer - which, isn't that often. If I have to gap-fill then it is logical that someone who takes all the new exams and passes them all with 70% still has a lot of gaps to fill. Indeed, that person, may have been lucky on the day of the exam - even someone scoring 100% on the day may have had a little luck. On another day with a different batch of questions he might have scored only 90% - so, he too, will almost certainly have some gaps. Back to the 70% man - he should be forced to gap-fill all the parts of the syllabus that he evidently doesn't know much about. I am being facetious. The point is that it is an absolute travesty that someone who is already diploma qualified - having been an advocate of 'knowing your stuff' years before it has now become compulsory, should be treated in this manner. All because of a rulebook made up, on the hoof, by a bunch of self-serving, self-righteous jobsworths. RDR won't stop the next banking crisis and neither will the combined forces of the FSA, BoE, HM Treasury and most of the MPs - many of whom will be looking for a nice little earner as a non-executive director with a financial institution when they lose their seat. That arch criminal Blair is earning a tidy few bob with JP Morgan when he is not keeping the peace in the Middle East. What a corrupt world we live in !

Posted by: Bill Wells

RDR and all that.

While the RDR's main focus has been its impact on the adviser community the consequences for the product providers, as far as i have read, has seen little debate. Yet the consequences could be just as far reaching. Their ability to change business model is hampered by their long legacy of transactional business that needs ongoing servicing. The lack of viable new business flows for any number of reasons may result in closure to new business and a further restriction in product choice to advisers and consumers alike.Some may attempt to 'go direct' to the consumer but previous experience suggests this would not succeed. Let's hope that even at this late stage a FULL cause and effect analysis can be undertaken before we all leap over the cliff!!

Posted by: Duncan Jones

No 9

You missed one: How will you ensure that customers understand the new divisions (simplified, basic, restricted and Independent)? And how are you going to police this in view of the fact that you are not exactly doing a brilliant job of policing the current regime that only has two divisions. Your new divisions will be completely worthless without really robust disclosure which is strictly enforced.

Posted by: Harry Katz

where is the person in RDR?

Tony Gordon, erstwhile President of the LIA and owner of redcliff associates said - prospects don't buy because they understand the product, they buy because they feel understood. It's the benefit they want not the system of providing it. A client is only concerned that a policy will work, not how it works. In fact they are mightily disinterested in how it achieves its results. All of which is totally and utterly lost on the FSA and its RDR. RDR makes the assumption that the client wants to understand everything about the policy and the reason it is being adopted. How far away from the truth does one have to get???

Posted by: Petrometro

Brown's RDR (cont)

Who are the IFAs who actually really believe that regulators create successful business ideas? Come on, show yourselves. Stand up and be counted.

Posted by: Ken Durkin

RDR right reasons wrong execution

I'm thinking God do I really want to join in here - the RDR in my opinion was conceived with good intentions - despite what IFA's may say and do (I'm an IFA by the way) - however there are still some cowboys in the business, charging clients 7.5% in commission to do the simplest of investments, offer no service worth speaking of, and revisit clients only when they 1. complain, 2. have further funds to invest/churn. RDR whilst unlikely to completely rid the community of such advisers it will certainly reduce them, as those that have that approach to client service are less likely to pass the required exams. The aim of the RDR was to raise standards across the whole financial advisory industry, but unfortunately whilst the IFA's will bear the brunt of the new regulations and costs, I feel it will be the big institutions with their captive audiences - the banks - that will be the real winners when the dust has settled and the impact of RDR is finally measured in 2013 and beyond

Posted by: Andy Simpson

Agree with Andy S

A laudable mission statement where execution of the plan will not achieve the original stated mission. It would have been worthwhile actually evidencing what the problem was in the first place, working out what the desired end result was and the stating it publicly. The RDR has become pure mission creep.....

Posted by: Phil Castle

VAT and RDR

The move to fee only advice will act against the consumer. We already use a policy of hourly rate fee equivalent commission charging. We calculate our hourly rate costs and then gain the clients consent to gather this fee as commission, thus avoiding 20% VAT. How does it benefit the consumer to push their prices up by 20%. The simple answer to this is to enforce the existing commission and fee dsclosure rules. Let the FSA check individual cases and establish how much work went in and how much commission was received. This will stop the cowboy 7.5% bond commissioneers. So, let's not throw the baby out with the bath water. Let's use the commission system to our clients advantage (to avoid VAT, as we do) and try to stop this ridiculous grab for VAT by HM Customs and Excise. All it will do is price ordinary men and women out of the advice market.

Posted by: Alistair Paterson

Cowboys

Won't the cowboys just take a 10% adviser fee and 1% annual adviser charge. Over-charging has no limit where as commission taken does. Also I note that the 7.5% bond commission usually has no trail. Hence the 3% commission on an ISA/OEIC with 0.5% trail will generate 8% commission over 10 years. Is the OEIC adviser any less a cowboy? I (in the spirit of TCF) recently moved to charge the same for bonds as for ISAs and Oeics and noted that the returns or overall commission taken hardly changed.

Posted by: MarkG