FCA’s Martin Wheatley: Banks were too slow to act on RDR

Wheatley: “A number of the larger institutions have been slow”

Financial Conduct Authority chief executive Martin Wheatley has revealed the regulator’s surprise at banks’ slowness to respond to the RDR.

Speaking at the FSA’s final public meeting in London today, Wheatley reflected on whether he judged the RDR to have been a success so far. 

He said the number of qualified advisers was as expected and the FCA was encouraged by the move to clean share classes.

But he added: “We expected the industry to professionalise. What we have been more surprised about is that a number of the larger institutions have been slow to do that.

“What we had with a large number of retail distributors is a slowness to revert to business models that are RDR compliant.”

Fundweb sister publication Money Marketing understands the regulator has been taken aback by the extent of the withdrawal of banks from the mass advice market, and feels that banks are only developing advice models now that they should have been working on a year ago.

In March, Money Marketing revealed the number of IFAs and tied advisers operating on the first day of the RDR was 20 per cent down on December 2011 figures while the number of bank advisers fell 44 per cent. The total number of retail investment advisers fell 23 per cent from the 40,566 estimated by the FSA at the end of 2011 to 31,132 at the end of 2012, the first day of the RDR.

FSA estimates suggest there were 25,616 IFAs, tied and multi-tied advisers in December 2011, of which 21,696 were IFAs. This fell 20 per cent to an equivalent 20,453 advisers after the RDR deadline. The FSA is unable to give a split for IFAs.

The number of bank and building society advisers fell by 44 per cent from an estimated 8,658 in 2011 to 4,809 post-RDR. Since these figures were revealed, Santander, Axa and Aviva all announced they were scrapping their advice arms.