Treasury select committee members have outlined major concerns about the impact of the retail distribution review (RDR), with some expressing frustration about the way IFA bodies responded to their grilling.
Giving evidence at the committee this week, Robert Sinclair, director of Aifa, and Steve Gazzard, director of operations at the Institute of Financial Planning, were scrutinised by MPs over the large number of complaints they had been getting from IFA constituents regarding the RDR.
Sinclair told MPs he believed the Financial Services Authority (FSA) had lost its way with the RDR. He said he agreed with the QCF level four benchmark but branded the “cliff edge” of 2013 to gain the RDR qualification as “unfortunate”. Gazzard said his membership had not raised concerns about the higher qualifications.
But MPs expressed concern that their answers were out of sync with the anger that they have felt from IFAs about the review.
Andrea Leadsom, Conservative MP, said: “This whole discussion this morning brings out my worst fears, which is that trade bodies never really say what they think.”
Leadsom said she is concerned the RDR will lead to less people getting advice and saving for their future. She said: “You have a problem with some of these things but your message is not being heard, this is your chance to tell us what needs to be different. I wonder, are you actually taking it?” (article continues below)
Sinclair replied that Aifa has been making such points to the FSA for four years but they have not been listened to.
Gazzard told the committee that it was impossible to compete with the multi-millionpound budgets of banks and insurance firms’ PR machines.
“This whole discussion this morning brings out my worst fears, which is that trade bodies never really say what they think”
George Mudie, Labour MP, challenged the pair directly over an older IFA in his constituency who is concerned about passing new exams.
He said: “Have you not any compassion for a fella coming to the end of his working life and you have stranded him?”
Sinclair pointed to Aifa’s work in developing an alternative qualification but suggested the industry was having difficulty finding enough work-based assessors.
Gazzard said: “We would be willing to consider workplace assessments but we remain to be convinced they would test at an adequate level.”
Andrew Tyrie, Committee chairman and Conservative MP, said: “We are here to represent voters and consumers and you have sensed some frustration around the table that we have not had it quite as forcefully as we would like. We have all heard it ourselves time and again from the people you represent. They moan incessantly about the FSA; it seems as if a long shadow of the FSA is cast over here, muting your criticisms.”
Jesse Norman, Conservative MP, said: “What you have said, between you, over the past 45 minutes is that you acknowledge the RDR has cost four times what it should have cost, the consultation was poor and the initial ideas that it set out to achieve have fallen away.
“Does it not strike you therefore that it is frankly a bit of a fiasco as far as the retail investor and particularly the small investor who might use a commission-based broker?”