FSA reports 6.2% fall in advisers pre-RDR
The FSA has acknowledged a 6.2 per cent fall in the number of advisers and product intermediaries in the run-up to RDR – albeit not incorporating advisers working exclusively through platforms.
In retail investment product sales data published at the end of August, the FSA noted the number of “selling firms” –which it defined as firms selling products made by providers – had declined by 6.2 per cent during the 12 months to March 31, to 7,868 companies.
In the first quarter of 2010 the FSA said roughly 8,800 “selling firms” were in operation.
This is in spite of a small increase in the number of product providers, up by 0.5 per cent to 297 firms.
The figure adds to mounting signs that advisers are exiting the industry prior to the introduction of the RDR at the end of this year.
The FSA has previously estimated that up to 10 per cent of IFAs, and 8 per cent of all advisers, could leave the industry – almost 4,000 individuals. Other estimates have subsequently put the figure significantly lower. However, this latest data from the regulator was based only on an analysis of direct sales and did not record any data connected to sales through platforms.
This means advisers who work exclusively through platforms may not have been picked up in this survey.
Direct sales fell to an all-time low of 2.5m between April 2011 and March 2012, the regulator said, an 11 per cent decline on the previous year’s figures.
The FSA acknowledged this may be connected to the increasing use of platforms by intermediaries.
Off-platform sales of commission-paying products by advisers rose during the period, although the FSA did not state by how much sales had increased. The regulator also said that an increase in the proportion of investment bonds sold with advice from life insurers, which rose from 24 per cent to 40 per cent.
The FSA said: “Investment bonds sold by insurers act as ‘wrappers’ for other products, and a quirk in the rules means that they will continue to pay commission after the RDR is implemented.
“There is a concern that some advisers will exploit loopholes in the RDR to continue to earn commission.”
Products which do not pay commission saw sales fall. Sales of investment trusts fell 70 per cent year-on-year, bringing in just 1,493 sales in the first quarter of 2012 compared with 4,965 in the first quarter of 2011.