The Financial Services Authority today issued a feedback statement to the responses received to the ‘Retail Distribution Review’ - a discussion paper first published in June last year on the future delivery of financial services in the UK.
The RDR discussion paper, for anyone who hasn’t read it, asked for proposals as to how the financial services industry could make “more consumers have sufficient confidence in the market to want to use its products and services more often. To achieve this, we need an industry that more clearly acts in the best interests of its customers and treats them fairly.”
It has been a complete mystery to most people as to why exactly the FSA needed to embark on this particular exercise just now, given that financial advisers have had to cope with endless regulatory change over the last 20 years, with little tangible benefit to the consumer - from the maximum commission agreement of the 1980s, to polarisation in the 1990s, and more recently depolarisation.
The industry has also had to cope simultaneously with numerous EU directives - from the Distance Marketing Directive to Mifid and even one called MAD (yes, really) which I believe stands for the Market Abuse Directive.
Today’s feedback statement was underwhelming to say the least. Given that the FSA has received over 900 responses from an industry anxious to know its fate, it is dispppointing that the FSA could come up with nothing better than to effectively say: “Thanks, guys, but we need more time to consult and, by the way, it’s still up to you to find “market led solutions” on “professional standards, remuneration arrangements and the provision of simple services to consumers.”
The FSA’s press release continues to state the bleedingly obvious: “We think a simple landscape is important if consumers are to understand the industry and have trust and confidence in those they are dealing with….. However, we do not underestimate the significant difficulties that come from this simple picture and we need to deepen our understanding of the impacts on consumers and firms….”
So clearly, nothing has been decided and advisers (and their clients) will have to await clarification in October this year, when the FSA is due to issue its final proposals and a timetable for implementation.
Most IFAs I have spoken to think the whole exercise is a complete waste of time, as was depolarisation before it, which many people regarded as a retrograde step. Polarisation had worked reasonably well for around 10 years and the general public was starting to understand the difference between an IFA and a tied agent.
What the FSA has proposed in the RDR would simply add further confusion to an already confused public. The best thing the FSA could do would be to ditch the whole exercise and let advisers just get on with the job of advising their clients.
Right now they need more regulatory upheaval like a whole in the head.
