Retail Distribution Review

Written evidence submitted by Oyster Financial Services

1. In connection to the above discussion, we would like to make the following submission to the Treasury Committee

2. We are the partners in Oyster Financial Services, a firm established over 10 years ago with a reputation for providing our local community, both through our existing customer base and referred clients, with face to face trusted advice.

3. There is a regulatory change being implemented by the FSA, known as the Retail Distribution Review which we believe will cause disastrous and irreparable damage to the framework of both the existing and future financial services in the UK as we know it today.

4. Whilst we are in total agreement with the need to raise professional standards in the financial sector, both across the private and the banking systems, it is our belief that the call to move to a 'fee based' menu to remunerate suitably qualified advisers for providing services that they already provide, could prove to be catastrophically damaging and we dare say extremely short-sighted of the FSA as a whole.

5. The proposals made by the FSA to quite literally 'disallow commission' as an option for which both advisers and clients can choose in order to fund the costs of accessing and paying for financial advice, is in itself against the ongoing requirements stipulated by the FSA in which we are required to Treat Customers Fairly (TCF)

6. Moving forward on this basis cannot thoroughly embrace the TCF ethic, as the very nature of access to advice for the majority of the UK population will become in itself 'restricted'.

7. This will be in the main part due to the division of the UK classes, where the 'High Net worth individuals' representing probably less than 1% of the UK population, having the means to afford the upfront and ongoing retainer fees and thus the access to the advice they require. Compared with the middle and lower classes representing the lions share of where most of the UKs adviser population operates, without the capital and affordability for ongoing fees and thus with nil or restricted access to the advice they require.

8 It is our opinion that this class band represents where individuals need advice the most. They have the ongoing pressures forced upon them by the UK economic situation but with more limited income and capital resources, yet are faced with parliamentary intervention such as rising taxes and reduced available benefits, that by its very nature creates an environment where the need for advice is paramount.

9. It is exactly these people whose need to make provisions for themselves in the forms of protection/savings/pensions, and is the sector of the population that the government is targeting in order to fill the ever widening gaps in provision that the UK is facing. With the regulatory proposals that the FSA are wanting to enforce, they risk creating the complete opposite of what they are looking to achieve, with only the wealthy having true access to unrestricted advice.

10. Coupled with this we believe that the future of financial services provision and more importantly suitably qualified financial advisers looks bleak. The abolition of offering a client the option (with full disclosure as it already stands), as a method for paying for access to financial advice, may see the mass exodus of an already ageing adviser population. This in turn will add yet further damage to the ongoing issues with the huge UK savings and retirement gaps, and possibly irrevocable repair to the private sector as a whole.

January 2011