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Post subject: FSA Final Proposals
 Posted: Sep 26, 2008 - 03:51 PM
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Joined: Apr 05, 2005
Posts: 2987
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FSA’s Retail Distribution Review proposals seek to establish a new level of consumer trust and confidence
The Financial Services Authority (FSA) has published its Retail Distribution Review (RDR) feedback statement outlining proposals to give more consumers confidence and trust in the retail investment market, at a time when consumers need real help and advice with their retirement and savings planning.
The proposals also reform the investment market, preparing both consumers and the industry for the future. The statement outlines how this new level of confidence and trust for consumers can be established by:
· Providing greater clarity for consumers about the advice service being offered by making a distinction between independent advice and sales advice, and including the connection with the proposed free Money Guidance service;
· Raising professional standards of all advisers by setting minimum qualifications for different types of advice and establishing a Professional Standards Board to boost consumers’ confidence in the industry;
· Modernising the way advice is paid for by requiring independent advisers to agree the cost of financial advice with customers up-front, removing the possibility of commission-bias and ensuring the cost of all advice is clear to consumers whenever it is given; and
· Introducing a new standard for independent advice by ensuring advice is unbiased, unrestricted and extends to all types of investments.
Jon Pain, FSA managing director of retail markets, said:
“The RDR proposals provide a golden opportunity to regain consumer confidence and trust in the financial services industry.
“Consumers need help more than ever with their financial decisions, whether planning for retirement, saving for the future or dealing with current financial pressures. We believe there has never been a better time to foster more confidence in the industry and provide consumers with real help and advice to empower them to use savings and investments products more often.
“The reforms are wide-ranging and will be challenging for the industry, but they also present significant opportunities for firms and individuals operating in the retail investment market to modernise practices, raise standards, and treat their customers fairly.
“We are grateful for the feedback and engagement we have received from small and large firms alike. We remain open to suggestions on how to further open up access to advice through industry solutions such as guided sales, as well as through the free Money Guidance service that we are piloting in partnership with the Government.”
The key proposals in the feedback statement include distinguishing between independent advice and sales to create better clarity for consumers about the investment services available. The key points of this distinction are:
· Independent advice is where adviser firms provide recommendations that are unrestricted and unbiased and consider all investments and providers from across the market to ensure they meet a customer’s needs. Consumers will agree the cost of advice up front – removing the potential for bias – and independent advisers will adhere to significantly higher professional standards.
· Sales advice will be where firms recommend the products of one or a limited range of providers and make this clear to customers. Sales advisers will also have to meet the same professional standards as independent advisers and show clearly the cost of their advice.
To increase and improve consumer access to investments, the FSA will also help firms develop a simplified sales service for a limited range of products, building on the work already underway in the industry and by individual firms. The FSA will remove its current rules for Basic Advice to simplify further this landscape.
The FSA will be consulting on policy proposals for the RDR during the first half of next year with the intention that all firms will have implemented the changes by the end of 2012.
In parallel with the RDR, the FSA has been reviewing the prudential requirements for personal investment firms (PIFs) and will publish a consultation paper on raising the minimum standard and improving the quality of capital and making it consistent for all firms.
http://www.fsa.gov.uk/pages/Library/Policy/DP/2008/fs08_06.shtml |
Last edited by stevepett on Sep 26, 2009 - 07:51 AM; edited 1 time in total
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Post subject: FSA Final Proposals
Posted: Sep 28, 2008 - 05:18 PM
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Joined: Apr 28, 2008
Posts: 1
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Jon Pain, FSA managing director of retail markets, said:
“The RDR proposals provide a golden opportunity to regain consumer confidence and trust in the financial services industry."
He's absolutely right, but quite clearly omits (or forgets) that this is also a 'golden opportunity' to regain adviser trust in the FSA and the Regulatory System.
Consumers do need more help than ever before, but eradicating the small firm advisers in favour of 'employed' bank/ buildings society advisers will not achieve this.
Removing 'free advice', advice that is paid for by commissions, in favour of decision tree or execution only 'sales' will lead to more clients buying inappropriate products that ever before.
Those who will be able to afford to pay for advice by Chartered Planners, may have access to higher qualified individuals, but this does not mean they are all 'honest' individuals.
It may have escaped the FSA that there are many bright, learned individuals who can pass any number of exams, but would rob their own grandmothers if it meant an easy profit.
Whilst Financial Services as an industry has eradicated most of these types, it doesnt necessarily ring true that qualification will remove those that remain.
The easiest way to bring true caring advice to cleints is Polarisation with the option for cleints to pay fees for better service and cleint care, either on top of or instead of commission - as long as the client is aware and agrees.
Perhaps a 'lead in' experience requirement similar to the 3 year, 600 hours requirement that exists for Insolvency Practioners may prevent those who were car salesmen and carpet fitters one minute becoming advisers the next (apoligies to any former car salesmen or carpet fitters but you know what I mean). |
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Post subject: Why work for free?
Posted: Sep 29, 2008 - 11:24 PM
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Joined: Apr 05, 2005
Posts: 2987
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Why work for nothing? I charge at least £175 to provide any advice and I charge for implementation. If I'm not going to be profitable - for me or the client - I pass them on to an IFA who works on commission
From the survey |
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Post subject: RE: Why work for free?
Posted: Sep 01, 2008 - 01:35 PM
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Joined: Apr 05, 2005
Posts: 2987
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Hi Steve
There is no way the FSA will change their mind
I have been in business for 21 years and the problems are not how we are
remunerated or what qualifications we have, its basic trust between client
and adviser.
My principles have always been treat a client as how you wanted to be
treated yourself not rape and escape like a number of advisers. TCF has
become complicated when it should have been simple.
It seems to me that we work in a business where the goal posts change every
day and the criteria to continue working in this invironment is getting
harded and harder. We as an industry have been hit the hardest and still the
FSA come out with new bench marks just to stand still, what other business
has this pressure.
The fairest system is as follows:-
Go back to two levels of advice:- Independent advice whether commission or
fee based and tied advice. We know its not going to happen because too many
people have too much to gain i.e Training companies such as CCI and PFS, how
would they survive if they were not receiving new revenue for
qualifications.
I have now been informed at the age of 54 that I need to do further exams to
stand still, let me qualify this decision.
A graduate leaves college and goes on to do all the examinations required by
the FSA and more, what have you got, knowledge but no experience of the
business or life.
An experienced adviser failed to achieve the benchmark laid down because he
has not got the time to study as he is trying to run a busy, what have you
lost to the industry and who would a client rather talk to.
It does not matter how or what the FSA do they will not stop someone conning
a client whether they are qualified to the highest level or not because
there will always be people looking for a quick road to success at the
expence of others. All nned to do is look at the stockmarket and see what is
happening there.
Regards
Stephen |
_________________
Stephen Pett 01323 741209
Editor, IFAbonus THE information site for IFAs
Editor, www.FindaPro.co.uk - find local advice
MD www.APWW.co.uk/lpa.htm - professional Will Writers
MD www.WillCustodian.co.uk - Will Storage etc
www.SWWtrust.co.uk - probate
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Post subject: RE: Why work for free?
Posted: Sep 02, 2008 - 09:55 AM
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Joined: Apr 05, 2005
Posts: 2987
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need to ensure that experience is included within competence requirements
and that exams are not the only route since its going to loose a lot of
advisers.
needs to find a way that does not require exams all the time. we are trying
to run a buisness and having to studt all the time is impracticable and in
these difficult times w eare simply trying to remain profitable
steve w |
_________________
Stephen Pett 01323 741209
Editor, IFAbonus THE information site for IFAs
Editor, www.FindaPro.co.uk - find local advice
MD www.APWW.co.uk/lpa.htm - professional Will Writers
MD www.WillCustodian.co.uk - Will Storage etc
www.SWWtrust.co.uk - probate
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Post subject: RE: Why work for free?
Posted: Sep 02, 2008 - 10:48 AM
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Joined: Apr 05, 2005
Posts: 2987
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Hi Steve,
I agree RDR fatally flawed, but only re 15 year long stop and re
mandatory PB membership/increased min quals. The other issue you
highlight and I agree with is the complete lack of confidence IFAs have
in the FSA. The rest I actually think is an own goal on the part of the
banks, but very few people have actually realised it yet! I will be
focusing on longstop and Pb/Mandatory Quals only as a result. See my
post on Citywire.
http://www.citywire.co.uk/adviser/-/blogs/business-development/content.a
spx?ID=322582&re=4282&ea=48662
"The good things about the RDR (and for all my criticism of the RDR,
there ARE positives too), is that if implemenetd corretly, every
consumer can be given access to Independant Financial advice by
approaching an IFA and once sitting in front of them, the client can
then make the choice whether they want to pay for Independant Advice or
opt for reducing cost (and risk to the adviser) by asking them to select
from a representative sample. Look at RDR Feedback Annexe 1 Q12 Response
""Chapter 3 explains that it would be possible for a firm to offer both
independant and non-independant guided services, so an IFA would be able
to offer a non-independant guided sales service provided it ensures
customers understand its limitations including that it is NOT
independant"
The above for my firm will be solved by this being made clear on the
recording of the meeting with the client and them saying they understand
it is not "Independant Advice". When I give IFA advice, everything is
bespoke, which requires more research and hence more cost. I currently
operate no panel unlike some networks, but when RDIP (RDR originally)
moves on, then we would look to run panel checks monthly using Synaptice
or Aquoes and clients will be able to choose bespoke advice or the
monthly panel selection.
We already effectively do this and I suspect many IFA firms do when it
comes down to advice to employees of Group Schemes. We are Independant
Advisers, but when giving advice about action sto take with regard their
employer's scheme, this is not Independant, is made clear and it a
potential conflict of interest we make clear to teh client and then
manage accordingley"
Phil |
_________________
Stephen Pett 01323 741209
Editor, IFAbonus THE information site for IFAs
Editor, www.FindaPro.co.uk - find local advice
MD www.APWW.co.uk/lpa.htm - professional Will Writers
MD www.WillCustodian.co.uk - Will Storage etc
www.SWWtrust.co.uk - probate
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Post subject: Another way
Posted: Sep 03, 2008 - 12:00 PM
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Joined: Apr 05, 2005
Posts: 2987
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Dear All,
I have been studying the whole RDR debate and come to some conclusions about what my offering will be going forward.
Independant is a mindest rather than anything else and Chris Cummings has finally got his head around what many IFAs have been saying for years, i.e. the issue for clients is actually;
1. Are we the agents of our clients or
2. Are we the agents of a provider, i.e. insurance co, investment co etc.
This is mentioned in annexe 1 of the RDR Feedback point 17. When you approach things from this perspective, there is then a clear read across for mortgages and protection business too.
The good things about the RDR (and for all my criticism of the RDR, there ARE positives too), is that if implemenetd correctly, every consumer can be given access to Independant Financial advice by approaching an IFA and once sitting in front of them, the client can then make the choice whether they want to pay for Independant Advice or opt for reducing cost (and risk to the adviser) by asking them to select from a representative sample. Look at RDR Feedback Annexe 1 Q12 Response ""Chapter 3 explains that it would be possible for a firm to offer both independant and non-independant guided services, so an IFA would be able to offer a non-independant guided sales service provided it ensures customers understand its limitations including that it is NOT independant"
The above for my firm will be solved by this being made clear on the recording of the meeting with the client and them saying they understand it is not "Independant Advice". When I give IFA advice, everything is bespoke, which requires more research and hence more cost. I currently operate no panel unlike some networks, but when RDIP (RDR originally) moves on, then we would look to run panel checks monthly using Synaptice or Aquoes and clients will be able to choose bespoke advice or the monthly panel selection.
I am emailing the three compliance firms I like, Whitechurch, Financial and Jane Sanders of MLP along with Emma Tee (Perceptive paraplanners) to work out whether they would provide this for a cost to non network members perhaps.
Kind regards
Phil |
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