Blog: Angry Tyrie's letter ruffles FSA's feathers

At last - FSA on the back foot.

As I suspected at the weekend when news of the FSA's peremptory dismissal of the TSC's report first broke; Sants and Nicoll have (thank goodness!) made a big miscalculation in crossing Andrew Tyrie and his all party committee in this way. Notwithstanding the brainwashed comments from IFAs on other blogs today that "it won't make any difference" I predict that the FSA could well be forced (and not before time) to soften its "cliff-edge" approach to the 1st January 2013 deadline. Those who oppose the way the FSA has gone about the RDR should do all they can over the coming weeks to keep up the pressure on that unaccountable body. There is still a lot to play for and I particularly urge those IFAs who have been bullied into near submission to make their voices heard right now.

Posted by: Roger Heath

About time

The FSA has so far ridden roughshod over over all who oppose them. But their less than stellar success to date testifies to their institutional incompetence - which is of course why they are being wound up. Rather like the Emperor maybe the time has (at last) come to inspect Hector's clothes.

Posted by: Simon Webster

ADMIRABLE BUT FUTILE

Great effort Mr.Tyrie, but if you genuinely think that at this late stage that the out-of-touch, pompus dictator Sants is going to be distracted from his ultimate objective of ridding financial services of the IFA community you are surely mistaken. Sants is a zombie driving a juggernaut with Nicoll a willing passenger. They are doing 200mph, only stopping to refill the lorry with more paper, more biscuits and coffee for the endless consultations, and of course, to collect bags of money from IFAs.

Posted by: Keith Jayne

action not words

Don't beleive anything will change it is all words and no action. Time the TSC used it's powers and Parliament to make the changes they believe in or Parliament and our democracy is in effect a waste of time against the FSA who are unelected, unresponsible and unaccountable and any Government that allows that in a democracy should be booted out asap.

Posted by: Michael Fallas

Ignorant FSA

I'm not suprised by the swift dismissal of any interuption to the FSA agenda. The majority of advisers who are in the industry for the right reasons (clients not cash)agree that RDR is the mistake of the century - and indeed the last. Even those that champion the changes quietly agree that RDR will leave many to the mercy of the banks or no advice at all. Ask FOS where most complaints hail from per capita! We have seen huge sections of the British public denied services when the IB markets closed (however poor the products were, they were in place- where there are none now)Now we are going to see this again with the majority of clients wishing not to pay fees - I don't want to and i'm an IFA. Please lobby your MP to save this industry while we still have it!

Posted by: Carl

Spoiled child

I think Mr Tyrie is coming across a bit like a spoilt child. I've put in this work, this is my opinion and I dont like the fact your not going to act on it. As with the TSC as a whole, they are toothless constituent MPs who demand to be heard. Other than provide more copy this achieves nothing.

Posted by: Bert Poppins

Democracy

Why shoudn't the TSC demand to be heard? They are elected representatives and part of our democratic system, which is more than can be said for Sants and his Storm Troopers.

Posted by: Bob

Relentless negativity

@ Keith Jayne & Michael Fallas If I needed two words to describe relentless negativity the first one would be "Jayne" and the second "Fallas". Don't you guys ever see the potential for a silver lining? Insead of constantly underestimating Andrew Tyrie and the rest of his committee why don't you pour a liitle bit of your energy into supporting the stance they have taken. It's not every day of the week that a highly respected Committee chairman like Andrew Tyrie tells the FSA its behaviour is "unacceptable". Have a litle faith, you faint-hearts!

Posted by: Roger Heath

Lost faith

To Roger Heath I would like to believe in what you say but sadly nothing is happening and time is passing. If we all sit back and be quiet then we may make no progress at all. Tough if you don't like my negativity, there is a simple solution, solve the problems we have and let us all have some faith in our regulator and indeed the TSC. I accept they are at least trying do something to solve the problem but there is no reason why this should all take so long and keep dragging on and on. Our MP's debated the issue in Parliament months and months ago and many of these issues were raised before then and at least a year ago or more. The issue of RDR and the concerns were raised I believe in 2007 !! It is time Parliament acted and not keep shuffling their feet. I will NOT keep quite to satisfy your or any others concerns until we get what this Government promised us in the Queens Speech, "justice, fairness and responsibility" If we all "keep quite" as you would like wating for some "silver lining" we may well have another Government by then. I suspect what I am saying is what many feel, but are afraid to say because they fear the FSA. When have the FSA taken any notice of what anyone says anyway? Many people have made the mistake of assuming I am negative but I use negativity for a positive purpose. Prove me wrong Roger and I look forward to some immediate changes from the FSA and smiling at the silver lining you mention.

Posted by: Michael Fallas

Only Salesmen Rush

A large part of this discussion centres around timescale and momentum, and only a little about content. RDR was launched in June 2006. Clive Briault In a speech made on 2 November 2006 highlighted a number of areas for Review - do remember that word. It is not implementation, it is not report, it is review. Why have we never apparently got beyond the Review stage? The FSA wished to Review the “root cause of the problems”. Has anyone ever seen a clear and concise statement of what those problems are/were and what the causes are/were. We have seen vague generalities, hints and suggestions but no clear statement of the root causes. I’m not entirely sure I have ever seen a clear statement of the problems. Without that base all the changes can only be based on vague opinion, and, for all we know, could be quite a bad as the unquoted problems. That same speech stated that the FSA would be looking at banks, building societies, life insures, fund managers, financial advisers and platforms. So they were explicitly looking at Banks 2 years before the collapse. That information presents cause for confidence in the FSA’s analytical abilities. The number of life insurers is contracting faster than a burst balloon, so no problems with competition then. And their administration has improved enormously to ensure that consumers have the best of attention. I heard a joke today about the word Care in Long Term Care being the definitive example of irony. Sorry to disappoint the teller, but I think my previous sentence just beat him. Fund managers and platforms are breading faster than rats in a plague, even though the FTSE 100 index has barely grown over the last 10 years. To whom are they adding value? Yet the FSA explicitly stated they would look at the focus of volume over quality. Has anyone seen any figures about volume and/or quality? Interestingly Mr Briault did raise the spectre of the fact that “well intentioned regulatory intervention may have all sorts of unintended consequences and may not necessarily improve matters”. Has anyone at any stage thereafter heard a murmur from the FSA that any of their directives may be less than perfect? A large number of advisers have raised genuine concerns about the direction of the market, but has this triggered a healthy debate with the FSA? Mr Briault laid out 4 aims for the retail market. Have they ever been debated? Have the FSA ever questioned whether these are relevant aims for the market, or merely conjectures thrown up by a committee, but which may actually be irrelevant? Have the FSA ever questioned whether these same objectives are relevant to both wholesalers and retailers, to sellers and advisers? Just for clarity I believe that sellers have as much validity as advisers. I am not aware of any substantive and impartial reports being commissioned from academia to determine the relevance of the criteria. I am not aware of any qualitative or quantitative analyses of the market. All one hears is that commission is bad, qualifications are good, and everything has to be in place on one particular day. Where is the research that commissions are materially worse that other remuneration alternatives. We all know that there have been abuses of commission, but is the abuse endemic or marginal? We do not actually know because there has been no quantitive analysis. And if it were so bad why didn’t the FSA bleed in some controls over the last 5 years to determine what, if any effect, control would have. Where is the research that demonstrates that a particular level of qualification will improve advice. [Do not wave that trashy Australian report at me - I would be embarrassed to use it as toilet paper.] I would suggest that there are significant indications from other walks of life that higher levels of qualification result in narrower perspectives. I would suggest that the one central quality of an Adviser is breadth of knowledge rather than depth. In other words the direct consequence of the FSA fetish on qualifications may well have the opposite effect to that proposed. If you have to obtain in depth qualifications why not go all the way and specialise in accountancy, fund management or the law, especially when there appears to be significantly more financial rewards. There is a balance between competence and specialisation that is not apparent from the standards being envisaged. But again there is no debate. And again if qualification is so important why did the FSA not start to increase the base level for entry into the industry 3 or 4 years ago so that they could measure the effects this would have. It is blatantly obvious that most of the systems and contracts of the providers are totally unsuitable for the strict implementation of RDR. Why did the FSA not commenced a slow process of change over the last 2 or 3 years. It may also be worth enquiring as to why Aifa has not spent some money over that time on quantitative and qualitative analysis. Surely it would not have been beyond their competence to undertake some research projects using existing adviser firms. Instead we will have an A-Day were everything is meant to change. We know that it will be chaos and that clients will suffer, especially from providers, and that will have an adverse effect on adviser work load. But more than that we will never know why RDR succeeded or failed. With so many factors being changed it is impossible to separate out the good from the bad. And perhaps that suits the FSA because it allows them to change their story to suit the circumstances. You will note that there are no targets to determine success or failure. Just like the “causes of the problems” they will just be unquantified opinion. It would be good to improve the standards of the industry - I doubt that it will actually happen because the turmoil appears to be setting adviser against adviser in a sort of Civil War, and the FSA keep stirring the pot. And one last thought on the FSA’s need for speed is to keep people from looking at the figures. Based solely on FSA figures it appears that RDR will cost an initial £1.5bn, and an additional £250m each year. Against this the FSA have estimated a current detriment to clients of £500m a year. [I will not even question how they arrived at that figure, behind closed doors.] With the best will in the world it is unlikely that RDR would ever produce perfection. A reduction of 50% would be considered an enormous achievement, and even then the market would only advance on that improvement at say 10% a year. So the the detriment would reduce after a few years to £250m - which co-incidentally is the same as the cost the FSA have indicated RDR would cost. So there is actually no saving to the consumer because they would be paying it through higher charges. [There would have to be higher charges because RDR requires that there be “well capitalised firms” and this could not happen if the firms accepted the cost. They would actually be in breach of an RDR requirement to do so.] But we should also remember the £1.5bn start up costs and the excess detriment in the initial years, until we become very good boys. There is no way for the consumer to claw that back. So the question is should RDR go ahead, or should the industry put aside £500m a year for compensation purposes, and reduce the staffing of the FSA and the hundreds of Compliance Departments, which would cover the cost of the £500m allocation and probably enough to reduce the cost of the products? In theory regulation is brilliant. It may not be so brilliant in practice, but the FSA do not want to give us the time to figure that out.

Posted by: Glen McKeown