FSA must step in to tackle RDR misinformation
I grow increasingly frustrated that nothing is seemingly being done to prevent fallacious claims on fees.
The cartel of quiescence has been broken: the broadsheets have begun to discuss the Retail Distribution Review in earnest.
A lack of discussion of the regulation has been conspicuous outside of the trade press in the lead up to the rules being implemented at the end of this year. Much of the blame for this has fallen on the regulator for failing to effectively disseminate its vision beyond the parochial confines of the sector itself.
There is some credence in this, but the pervasive silence was also by some accounts a conscious decision by newspaper editors, who apparently did not wish to delve into the detail of a somniferous regulation that has taken years to come to fruition.
Indeed, Jeff Prestridge, personal finance editor of the Mail on Sunday, admitted earlier this month in his column for FTAdviser sister title Financial Adviser that his title had even consciously eschewed any mention of the RDR in a recent piece focused on the value of advice.
The esteemed Mr Prestridge explained: “Personal finance journalists like me prefer to write about things that the public can act upon immediately rather than about matters that are on a distant horizon.”
Some rudimentary research of broadsheet news coverage of the RDR confirms that there has been little in the way of discussion of RDR.
Using the power of their own website search engines I ascertained, for example, that The Guardian and The Observer had not even mentioned RDR in any article between February 2011 and August 2012.
The Telegraph has written about the rules just once in 2012 - and even that article appeared to be more of a promotion for the paper’s own ‘investment and savings service’, provided by Skipton Financial Services - while The Independent has several mentions of the rules but no articles directly on their consequences.
This trend seems to be changing, however. The Observer broke ranks when it published a story on 13 August warning over the new rules’ removal of ‘free’ advice and the potential for mainstream consumers to be left marooned without recourse to affordable services.
Not to be outdone, The Sunday Times published a piece this past week entitled “Death of a salesman” that predicted up to 3,000 advisers - 10 per cent of an estimated 28,000 currently active firms - would go bust as a result of the new rules eroding their customer base.
Both pieces highlight hypothetical examples of improved customer outcomes due to the ban on commission, particularly as a result of a decline in unnecessary - and costly - pension switching following the ban on incentivising commission on sales.
Most advisers, I’m sure, would say this is an anachronism. At worst this cynical tactic is no longer employed by all but a tiny minority of their peers.