FSA v TSC: Four things we learned

Last week’s Treasury Select Committee hearing on RDR largely covered old ground. But these debates always teach you something new about the regulator...

1. In public at least, the FSA will say ‘sorry’

Something unexpected happened during last week’s debate: The FSA apologised to financial advisers. “I am happy to say I am sorry,” Hector Sants said. “It is never our intention to cause distress in the language we use.”

At a previous hearing, Sants suggested a 20% loss of advisers as a result of the RDR was “acceptable”.

With thousands watching the debate live online, it was as good a time as any to express regret at making such a ridiculous statement.

2. Hector Sants does not read the trade press

Even as head of the organisaton responsible for the RDR, Sants can appear frighteningly out of touch with the people he regulates.

He accepted there were “elements” of the RDR that “significant minorities” did not agree with, but said he was not aware of any RDR initiative the majority were against.

It is true RDR naysayers have won more column inches in the trade press - including in this publication - but to brand them a “significant minority” suggests Sants is unaware of the level of discontent with the way the RDR is being implemented.

3. Minimum qualifications won’t be Level 4 forever

There are no “formal plans” to increase the minimum qualification requirements, currently QCF Level 4, for UK financial advisers, Hector Sants and FSA conduct director Sheila Nicoll declared during the hearing.

But, with a Level 6 minimum preferred by some respondents to the RDR consultation, it is likely only a matter of time before the FSA revisits the qualifications agenda.

Question is: Will it be for new entrants only this time, or will we have a fresh grandfathering row in 2015?

4. United, advisers can pack a real punch

There is a chance – and a fairly good one we think – that not a single RDR proposal will change despite last week’s public debate.

But this should not detract from the success of advisers and MPs in forcing the hearing in the first place. The FSA maintains the RDR will benefit customers, but have they been asked what they think of the proposals

A public debate like this offers the chance of more members of the public becoming aware of the RDR.