Retail Distribution Review

Written evidence submitted by Chris Dodd, Independent Financial Adviser

I am hoping the Committee will take some note of my submission. Having been an adviser in the financial industry since 1972, and an IFA since 1988, I feel I have something to offer.

My concern is that the FSA are trying to fit everyone, including clients, into a round hole.

Sadly this is not possible. My reasons are as follows.

1. I have several hundred clients and I know that very few would be able to pay for financial advice. My clients have been very happy with me receiving commission and appreciate I am extremely fair and normally take only half my entitlement. The RDR will abolish commission and create a barrier between those who can afford advice and the majority of people who cannot. A possible solution may be to reduce maximum commissions payable by providers.

2. The RDR requirements, as they stand, are extremely unfair on the older IFA. It creates a 'cliff edge' scenario whereby someone like myself will be, after thirty years’ service, disqualified from practicing on 1st January 2013. I see no reason why someone like me should take a raft of expensive exams for a few more years service. The rules as they stand could be contravening human rights and could be an illegal restraint of trade. This is another matter and I do not wish to cloud the issue further. My solution, which I think should be seriously considered, is to allow the older IFA to be grandfathered in some way. Important criteria such as time in the industry and complaints history would be a fairer way to judge the quality of an IFA. Incidentally, most IFAs use, and pay for, good technical advice which is on hand at all times. If I am not sure of something I will seek technical advice immediately.

3. Lastly, I would like to ask the Treasury Select Committee to discuss the lack of a 'long stop' rule for IFAs. I gather we are the only profession that can be subject to a 'stale' claim twenty or thirty years in the future. This is grossly unfair and IFAs should be brought into line with other professions.

January 2011