24% of advisers are walking RDR tightrope: FSA
Almost a quarter of financial advisers are on the brink of being unable to give advice from 1 January, the FSA’s latest figures have indicated.
Data from the regulator to the end of September found that 76 per cent - 27,400 - of advisers held both a level 4 qualification and had completed the necessary gap-fill to operate under the new retail distribution review regime next year.
A further 10 per cent, equating to 3700 advisers out of roughly 37,000 advisers in total, were still waiting for the results of their final exams. This means 24 per cent of advisers are still not fully RDR-qualified, with just six weeks to go until the deadline.
A spokesman for the regulator said the number of qualified advisers was expected to increase by the end of the year, but warned that those who were not qualified by the deadline and were not awarded a waiver would have to stop giving retail advice.
The figure of 24 per cent is almost as high as original estimations made by Ernst & Young in its 2010 Radar report for the FSA, which predicted the numbers of advisers would fall from roughly 30,000 to 20,000 by 2015 - a drop of roughly 33 per cent.
Former chief executive Hector Sants said in February 2011 that 20 per cent of advisers might leave; later, in March 2011 he told the Treasury select committee he expected between 8 per cent and 13 per cent of the UK’s registered advisers to quit by 2013.
Figures from various accredited bodies indicate a similar trend - between 10 to 20 per cent of members consider themselves to be ready for the RDR.
The Chartered Insurance Institute said 16,498 of its members now had their statement of professional standing, while the The Personal Finance Society’s said 89 per cent of individual PFS members considered themselves RDR ready.
The Chartered Institute of Securities & Investment said 80 per cent of its members affected by RDR were ready. By 15 November it had issued 5240 SPS.
Restricted or Independent?
The regulator’s third-quarter figures revealed that 58 per cent of retail investment advisers intended to remain independent after RDR, while 8 per cent were likely to switch to restricted advice.
Just 1 per cent will switch to offering independent advice from next January, while 33 per cent who offer restricted advice are unlikely to switch.
Nick Cann, chief executive of the Institute of Financial Planning, said the majority of the body’s members were RDR ready, but warned: “I would strongly recommend to those who may be level six qualified to ensure that they have also completed their gap-fill.”
The Institute of Financial Services refused to state numbers. The Chartered Institute of Bankers in Scotland was unavailable for comment.
Malcolm Streatfield, chief executive of national advisory firm Lighthouse Group, said: “We are ready for the RDR and have just 85 advisers out of more than 500 awaiting their final results. We expect the majority of these to be qualified and to have either obtained or applied for their SPS certificates by year end.”
More on RDR News & Analysis
- FCA: Adviser income has risen 5% in post-RDR world
- Mas under siege, but ‘advice’ elephant in the room remains
- ‘IFAs would rather consolidate than go restricted’