TCS v FSA: As it happened

In the round, levels of capacity and ageism. We go step by step through the TSC's grilling of the FSA on the RDR.

Comments welcome below and we are also tweeting @IFAonlineUK and #TSCvsFSA.

3pm: Here we go. Quite a good turn out for this in Committee Room 8. Sants and Nicoll in the dock. Bet they are well prepared. Sants has done a few of these already though.

TSC chief Andrew Tyrie describes RDR as a "sensitive" subject.

He tries to get Sants on discrepancies in his past evidence about the objectives of the RDR saying his recent oral evidence makes no mention of consumers.

Sants says this is an oversight and the basic objectives have not changed: sustainability and access for consumers.

Tyrie still keeps probing with Sants. Shouldn't we wait for the FSA's successor to be introduced? Sants replies: We don't believe the FSA shouldn't continue to deliver reform.

Tyrie: How far can RDR reduce the savings gap? Sants saying if marketplace working better and more trust then that would have an impact on the gap but it is not the main point of the RDR. 

3.14pm: Sants says simplified advice a very useful part of future market. Other elements of the jigsaw needed to improve the overall picture. 

3.15pm: Sants says sorry to cause "offence and distress" about comment on 10%-20% of advisers leaving the industry.

Tyrie asks him: What level of exits is unacceptable? Sants replies the level of capacity when the marketplace is badly affected is difficult to judge.

Performance matrix/levels of capacity? This is advisers' jobs at risk here!

No impact to the market on "loss of capacity" of 8-13% of advisers as this many could leave according to new projections, FSA says.

It is crazy to say the consumer experience not affected at this level and a disgrace to dismiss advisers' livelihoods in this way.

3.19pm: Why are so many people unhappy about the RDR Tyrie asks? Sants replies in 'the round' the RDR is supported but they would listen if there was a major disagreement on a particular issue. 

3.23pm: Nicoll says they have been "reasonable" in asking advisers to get qualified before the deadline.

3.25pm: Sants says he has "some sympathy" with individuals in a formal exam hall.

3.28pm: Nicoll: Satisfied "work-based assessments" as rigorous as other methods. 1500 IFAs signed up to FSA roadshows. Sants encourages more advisers to sign up! I am sure lots will want to meet him face to face after this.

3.20pm: Is there a plan to increase requirements to Level 6? Sants says keeping this under review but no formal intention at this time to up the qualification level.

3.32pm: How will the FSA police the new charging system? Nicoll says the FSA has an extensive programme pre and post RDR to supervise firms. Will be seeking data from firms on charges for advice and monitor this going forwards. What about the commission still paid on other retail products? Nicoll says it is using the RDR as a benchmark for other products. 

3.35pm: Isn't it a little odd as we are this far down the line to say there could still be bias in the advice system? TSC asks. Sants replies he is a "cautious regulator" and can't say there will be 100% success.

3.36pm: Labels for advice. Sants says they have tried hard to work out labels to use. He recognises they can't get perfection. Further question on "restricted". Nicoll says the FSA has listened to comments here. There will be different types of restricted advice either by number of providers or types of products advised on, she says. Nicoll says advisers can say "I am restricted but specialise in a particular area of activity."

TSC member says this would confuse him. What does restricted really mean?  

3.42pm: FSA says thay have accelerated meetings with the industry on simplified advice. Certainty for firms on this in a paper in the summer and they say this gives time to get services in place to meet the RDR deadline. Any delay in simplified advice won't delay RDR, says Sants.

3.45pm: TSC asks if a delay will add to consumer confusion? Nicoll says should be plenty of time but if simplified advice does come in a few months after the RDR this is not a major problem.

3.49pm: Sants says FSA and him are accountable to other bodies and want to improve that framework. 

3.50pm: Complaints about the FSA seem to only be made through the TSC or lawyers, a member says. Sants replies there is an accountability process. Asks for other suggestions how they could be more accountable. Getting angry here.

3.54pm: Tyrie says the FSA immune in the courts for reckless behaviour. Should you retain immunity for doing something really stupid knowing it is stupid? he asks. Not sure where this is going here-bit of an Alice in Wonderland moment. TSC on their own soapbox here but no real use to advisers.

4.01pm: TSC asks: Will the industry provide enough info to clients post-RDR to prevent mis-selling scandals? Nicoll thinks enough has been done. Customers should know more about what they are paying for advice and will have more control after 2012, she says.

4.04pm: Are these proposals final? the TSC asks. Sants says yes except in so far as a regulator needs to constantly monitor the market and take into account new info. If the info came to light, the FSA would look at it.

TSC member says what is the point of this hearing and its report if the proposals are final? The question on everyone's lips.

Sants says if NEW info is given they will do something. They have studied the info already received and there is nothing new here, he says. TSC member says why should Sants dictate what the TCS should ask him to re-examine? He argues the  TCS is representing the people and there are some major concerns here. 

Sants says the FSA only accountable to the framework in which it is placed by Parliament.

Again, the debate taken over by FSA v Parliament debate.

4.09pm: Sants and Nicoll don't have age profiles of advisers to hand! Disgrace here! Confusion on number of advisers reaching retirement forced out of the industry. Sants doesn't have the figures.

TSC says for men or woman over 60 Sants should put new proposals on the table. FSA hasn't considered age or length of service of advisers. A blanket decision is unfair, the TSC says, and it should revisit grandfathering. 

Sants says they will write the TCS a carefully-worded letter on this when he has the figures! They are aiming for a level-playing field for all advisers.

4.13pm: TSC says it is unacceptable to destroy individuals. It argues the FSA could regulate over 60s more closely and build-up a package for them , although this may costs these firms more.

4.15pm: TSC asks about impact of future European regulation on the RDR. Sants says a lot of thought on this. TSC says how can you anticipate what Europe will do when it is still in consultation phase. Sants says how many years do you want to wait against potential detriment? 

4.20pm: Nicoll says if firms flouting the rules and trail commissions inappropriate it will take action.

4.33pm: The RDR does not just have an IFA-focused agenda, Sants says. He understands why individuals think this is an "unreasonable initiative" but asks how do we evaluate this "in the round". He says many advisers are working with the model they are suggesting and successfully too. Entrepreneurial IFAs can prosper in the new world. Knows this is a workable model.

TSC: But up to 20% could drop out? Sants says they could but this may be for personal reasons.

Sants surprised there is real strength of feeling from IFAs on this issue.  There are "personal lifestyle reasons" advisers may not want to adapt to this model.

I would say their "lifestyle reason" being they don't want their life destroyed by all the exams and gap-fill. 

4.41pm: Nicoll says there is less mis-selling when an adviser is better qualified, according to FSA research.

This would surely only apply to certain types of products though!

4.43pm: Sants says tricky debate on restricting choice v regulating products at an earlier stage to prevent mis-selling.

4.45pm: Sants says the FSA might consider re-introducing a long-stop for advisers. He says he has "sympathy" with advisers calling for the reintroduction of an industry long-stop.