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Topics: Hector Sants| FSA
The truly horrifying and calculating way the FSA considers the livelihoods of individual advisers was revealed in its true colours today at the Treasury Select Committee hearing.
Replace how many advisers are needed to serve consumers well with ‘levels of capacity' and you have an idea of the Dickensian way in which Canary Wharf works.
The TSC and FSA seemed polls apart today with irate MPs representing their constituents or ‘real people' and the regulator representing a filing cabinet filled to the brim with statistics.
However, at several points in the debate the FSA machine did not even have their stats to hand. There were embarrassing pauses when an MP asked them for figures on the average age of advisers, and they were unable to fall back on their own knowledge of the sector. The TSC member then filled in the blanks by highlighting the number of advisers in their 50s or 60s.
We then had the farce about how many advisers could potentially exit the industry post-RDR and the ‘detriment' to consumers. CEO Hector Sants apologised for upsetting advisers with his previous comments about exit figures, which advisers will be relieved to hear are not now as high as the 20% previously calculated.
The number of advisers leaving could now be between 8-13% with an average taken of 10%, Sants said calmly. But this does not necessarily mean the number of firms, Sheila Nicoll added. Confused, you should be because Sants and Nicoll clearly were.
The TSC probed further, arguing this is just the number of advisers and there are all the support staff out of work if a firm goes under. No answer to this but you could hear Sants' brain whirring. Back to the stats department at FSA HQ for more number crunching.
I am sure many individual advisers forced out post-RDR will be delighted to learn they are only one of the 10% who will be leaving and "in the round" the situation will be better for most people most of the time.
Sants made the point the aim of the RDR was to improve the situation "in the round"- a phrase he used frequently during the debate-but he would not commit to a 100% success rate.
The FSA says it will be doing a vast body of work to see if the RDR is improving outcomes for consumers. How this will be measured I don't know. A reduction in mis-selling scandals? A rise in the number of people happier with their advice? If you can put a figure on happiness that is.
What the FSA have failed to add into their number-crunching machine is that this is a people business. You can't attach numbers to the adviser/client relationship or the livelihoods of individual advisers. It is this failing to see the people behind the stats which may just be the undoing of the whole RDR.
Katrina Baugh is editor of IFAonline and Professional Adviser.
E-mail: katrina.baugh@incisivemedia.com
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| Comment | Editor's blog: Victory for Canary Wharf machine over individual IFAs |
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Editors Blog
Great Blog, but so obvious. Is there anyone at Canary Wharf who actually knows anything about the IFA industry, or are we just an annoying pimple? Having met some really good FSA people on various recent roadshows and at my firms TCF assessment recently, I feel more sorry for these people as they are the people on the ground representing the likes of Hector and Sheila, who seem to have little idea about the realities of the affects of RDR on the average IFA and of course the consumers.
Posted by: Phil
Was it going to be anything other than this ?
It was clearly only going to be 'ever thus'. I read a marvellous phrase on an earlier blog 'Mind over Matter' meaning FSA do not mind (what happens) and clearly IFAs do not matter. Shame it is all so corrupt. Sants and co earn so much money compared with the average adviser and customer that they cannot comprehend the affect of their actions. They truly do live in a priviliged world of pay and benefits which is divorced from everyonelse. Hence they cannot (and will not) understand the the impact of the legislation they are implementing. No doubt they will go on to reek yet more havoc in new positions post 2013.
Posted by: Roger
Collateral Damage
We must end this unvirtuous circle where here today gone tomorrow regulators are able to inflict pain and grief on the industry with absolutely no come backs. Their arrogance and utter failure to understand the basics, let alone the nuances, of retail financial services invariably ends in futile rule-making and boomerang policies. Sadly, this is all in the name of the consumer.
Posted by: Alan Lakey
Improving Consumer Outcomes
I think the FSA believe that decimating the number of advisers (OK there are 1 or 2 bad ones, but the vast majority are sound) will improve the situation by having less people giving advice to fewer people, there will be less to go wrong QED. Let's not worry about the loss of advice to the mass market - they can get their advice from their mate down the pub, then no-one can complain!!
Posted by: Paul Tunnell
What's right?
The central theme of the editors blog is the importance of "livelihoods". Whilst I agree that in the whole the FSA are not fit form purpose, concentrating on the theme of this blog, I cannot believe that peoples livelihoods are more important than doing the job right. Are we saying money is more important than doing the right thing? If we are then we have no future, credibly or commercially. On a similar theme, it wouldn't matter one jot if we lost 50% of the advisors in this country. That's nothing to do with ability, fees or qualifications, it's simple supply and demand. Clients do not actively seek out advice unless they have to. Until financial education changes and clients generically see it as important, the arguement of diminishing IFAs is a waste of breath.
Posted by: Nigel Barker-Smith
How many?
Nigel Barker-Smith misses the point. People's livelihoods are protected by Human Rights legislation. that is not the right to do things wrong. It is the right to continue to do things right in the absence of any direct specific evidence that one is doing things wrong on an INDIVIDUAL level. AND the right to carry on one's chosen profession has been enshrined in UK law since well before the Human Rights Act And on another point. The FSA seem confused - I certainly am. Just how many 'livelihoods' do they plan to destroy? Is it 16,000 advisers or 20,000 firms. How can there be 20,000 firms with just 16,000 advisers? Or is it 16,000 advisers and 4,000 firms? Or is it 16.000 advisers plus 50,000 support staff? Or is it 30,000 adviser plus 100,000 support staff. AND how many IFA clients will lose a long standing trusted adviser? is it 1 Million or 2 Million or ..... Answers on a postage stamp please!
Posted by: Grosvenor
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