The FCA has defended the impact of the RDR on adviser numbers and consumer access to advice in its response to the Heath Report Two.
The FCA was asked by the Treasury Select Committee in January to comment on the numbers and methodology used in report, released by Libertatem director general Garry Heath in February 2015, relating to the impact of the RDR.
The regulator recognised there was a decline in adviser numbers in recent years but it claims this relates to market factors other than the RDR – such as banks withdrawing from the market and the consequences of mass misselling.
The FCA said that because the Heath Report measured the change in adviser numbers from 2008 – when the RDR was announced but not implemented – it was difficult to pinpoint how much of the change related to the RDR.
It says: “It is important to note that adviser numbers on their own do not tell the whole story, since the issue is not solely the number of advisers, but the number of clients those advisers service which determines capacity in the market.
“There is evidence that points to advisers having adequate capacity to meet demand.”
The FCA also disputed the RDR had left 16.5 million customers unable to access advice, as the Heath Report Two claimed. It said the report’s analysis had overestimated the number of “abandoned customers”.
The FCA says: “It takes the number of consumers who have received advice ‘at some time’ and then subtracts the estimated capacity for advice based on the number of clients the report estimates the advisers in the market at a particular point in time can service.”
It adds: “It would seem unreasonable to expect the stock of advisers at any one point in time to be able to service all individuals who have ever had advice at some time.”
The FCA said it was continuing to monitor the impact of the RDR and that it was delivering some positive impacts, such as improving adviser professionalism and reducing product bias.
Heath told Fund Strategy‘s sister publication Money Marketing Libertatem feels neither “bloodied nor unbowed” by the FCA response.
He says: “Most of their arguments have not scratched the paintwork on the report. What I want to look at are what parts of the Heath Report they have not criticised because if they have not mentioned it then presumably they are right.”