Retail Distribution Review

Further written evidence submitted by Chris Dodd, Independent Financial Adviser

I have outlined below evidence and actual factual information highlighting the major flaws in the RDR proposals as put before Parliament. I feel this is the last opportunity to make these important amendments. A great deal of their assumptions has been made using outdated reports and this gives a totally inaccurate picture.

a) The distribution model is not broken but the detriment caused by the banks is making IFAs appear to be guilty

b) IFAs have 80% of the pensions market and banks 6% but if we look at the redress paid under the Pension Reviews we can see that 88% was paid by the banks and insurers and 12% by IFAs.

c) The RDR will cost £1.7bn yet the FSA says that the saving on reducing consumer detriment will be £250-£500m p.a. These figures are wrong because they are based on a mix of2005-2007 new business and average commission figures. My estimate is around £50m p.a.

d) The professionalism argument is being promoted by reference to an eight year old Australian survey of 124 firms. The survey was flawed, in any event, because any firm which failed to give out a Terms of Business letter was marked 'poor' regardless of the quality of their advice.

The imposed cull of qualified IFAs, particularly the older ones who will not take a whole raft of time-consuming and expensive examinations, will prevent the average person from being able to afford sound and impartial financial advice. This is something which I have personally encountered many times from interviewing my clients.

The proposed' cliff edge' scenario whereby those IFAs who have not taken the new examinations will be thrown out of work on the 1st January 2013 has got to be amended in some way and I would suggest some form of 'grandfathering' for those IFAs who have been in the business for many years and have an unblemished record.

January 2011