Retail Distribution Review

Written evidence submitted by Alastair Lyon

IFA since 1986. Owner of Credenda since 1990, variously regulated by SIB/FIMBRA, SIB/PIA, FSA

I started to write about the RDR but am so totally bored by either being ignored, overruled, or just seeing the big battalions get their way that I was not going to do it

BUT THE LATEST REGULATORY BUMF IN MY POST ARRIVED THIS MORNING AND IT IS THE INTERIM FSCS LEVY

The FSA will of course tell you that the FSCS is really nothing to do with them. If you can find one IFA who agrees with that please do let me know.

This levy represents approx 1 % of my annual turnover on top of all the other direct and indirect regulatory costs.

This levy 25 years after the introduction of financial services regulation is a measure of the total failure of that regulation as presently represented by the FSA

The very same FSA who announced (with no supporting evidence) that the retail distribution model was broken 4 years ago while the wholesale model was not merely broken but collapsing before their eyes.

If the major banks, insurers or investment companies were hit with an interim levy of 1 % of gross turnover I believe there would be bloodshed in boardrooms, the FSA, Downing Street and elsewhere in the City and Westminster, and things would change.

I have no doubt others will comment on human rights, abandonment of the assumption of innocence if you are a financial adviser, the legitimacy of being authorised to advise on 31/12/20 and not on 01/01/2013, Regulatory interference in consumer choice re fees/commission etc

It is also obvious that the FSA is driving the RDR forward in the knowledge that it cannot be prevented from doing so.

I see nothing of benefit to the consumer in this vastly expensive regulatory project that could not have been done quietly and progressively under the existing rules.

The RDR is the usual regulatory sledgehammer to crack a nut at vast expense, and with no accounting to its membership who pay its costs for that expenditure. Only in this case there is considerable doubt as to the existence of the nut.

I apologise for lack of figures to evidence consumer benefit or detriment from the RDR. But unlike the FSA I feel it would be wrong to just make them up. But if consumer choice in methods of remuneration is removed I believe that to be significant consumer detriment. If significant numbers of IFAs, leave the market at the precise time when the country is trying to rebuild the savings culture I believe that is significant consumer detriment. If this is also happening at the same time as the introduction of compulsory pensions and the enormous new demand for advice that will incur I believe that is significant consumer detriment.

But of course whether you share my views or totally oppose them the really sad thing is that it seems you can do nothing about it, the government of the day having put the FSA outside of government and parliamentary control when they set them up.

January 2011