Retail Distribution Review

Written evidence submitted by Phil Mines, Chartered Financial Planner

I have been in the financial planning sector since leaving school in 1977 and am passionate about financial services as a profession.

In that time there has been a number of problems (some may say scandals) which are loosely termed together as "mis-selling". All of which have been a result of one of two weaknesses in the UK financial planning arena. These being

1. The general low standard of investment/financial planning knowledge required to give advice. Problems caused by well intentioned financial advisers who simply do not understand some fundamentals and often actively mislead by provider representatives .

2. The high level of commissions payable that by definition must negate the benefit of any advice. Problems caused by greedy financial advisers who simply do not care.

For around 20 years various levels of regulation have been imposed on the profession which have had various levels success & failure. The removal of the two main problem areas suggested by the RDR will probably be more effective than doubling the resources of the FSA.

The RDR should not be watered down. The level of qualification that it will introduce will still be lower than the level required for most professions and is arguably still too low. Higher level exams have been available for over 15 years now and there frankly is no excuse for any adviser (with a history) to be only certificate standard. It is not a matter of too short a period to achieve this standard but what have they been doing for the last 15 years!

As for commission this misconception harboured that advice is free needs to be corrected. Equitable Life masqueraded under this banner as well as many IFA’s "it is all included in the policy charges" has been the rogues explanation for too long.

The RDR is the first sensible bit of action a regulator has taken. It would be a shame for vested interest to destroy what should be a defining point in UK financial planning

Kind regards,

January 2011