Wheatley’s TSC travails are mere theatre

You see where I’m going with this, right?

Close to two years ago now, in those innocent days when some in the sector held on to the hope that the then-proposed RDR would be significantly amended or, better yet, deferred, I wrote on these pages about the ongoing hostilities between TSC chair Andrew Tyrie and the Financial Services Authority.

It followed a written request from the former for, among other things, the rule changes to be pushed back by a year. This was the second time Mr Tyrie’s committee had urged such action following the publication of a report in 2011 that had been pre-emptively dismissed by then FSA chief Sir Hector Sants.

I rather grandly characterised the linguistic jostling as a boxing match - and declared Martin Wheatley, then managing director of the FSA’s conduct unit, the winner by knockout after he adduced a range of statistics to show adviser preparations were broadly on track.

And I stand by that original verdict: most advisers did get qualified in time for January 2013; anecdotal evidence suggests advisory businesses are flourishing in the post-RDR world.

However, any implication that Mr Tyrie and his cohorts were ‘down and out’ has proven very wrong.

Mr Wheatley was effectively accused of trying to pull a fast one by highlighting a modest increase in advisers in the past year

They’ve been gearing up for another pop at the regulator for a while: last year former investment banker and committee member Mark Garnier hinted that it is minded to launch a full-on RDR review, which Mr Tyrie confirmed was on the cards at the Association of Professional Financial Advisers annual dinner (though it won’t come before the end of this year).

Warning shots were fired across the bow of the regulator at the TSC’s bi-annual FCA evidence session this week, when the truculent MPs launched a barrage of criticism over the perceived advice gap, apparent ‘commission lag bias’ and innovation inertia caused by the RDR.

There was also a terse exchange over adviser numbers, with Mr Wheatley effectively being accused of trying to pull a fast one by highlighting a modest increase in advisers in the past year when there are still some 15 per cent fewer in the market that there were in summer 2012.

If I were going to reprise the boxing analogy I’d say the FCA let a few stinging jabs slip through its defences - and it already looks unsteady on its legs ahead of the post-implementation review at the end of 2014, within which the TSC demanded a cost-benefit analysis be included.

All very dramatic, but what is the cumulative effect of all of this posturing? Unfortunately, not a lot.

Mr Wheatley was correct when he said during the session that general criticism of the rule changes has given way to concerns over specific areas, but crucially Mr Tyrie is right to point to the worrying effects of the advice gap at a time when the country faces a savings crisis.

Mr Tyrie is to be applauded. There are few select committees that are more effective at holding their respective government departments and independent regulators to account, and much of the credit for that must go to him.

He has forced apologies from the otherwise untouchable Sir Hector, among others, and has been a constant thorn in the side of the government and FCA on its banking reforms, which have struggled in their passage through parliament amid criticism of the lack of a licensing regime.

The committee chairman was FTAdviser sister paper Financial Adviser’s ‘person of the year’ for 2013. The accolade is deserved.

But the hard reality is while Mr Tyrie ‘gets it’ and is fighting the good fight, he holds no actual power to force change. All the while the FCA continues to reject his assertions on some of the consequences of the RDR, without wider political support his efforts could prove ultimately fruitless.

If sessions like that this week are to prove to be more than mere theatre, pressure from government is likely to be needed. Achieving this will be the real test of the TSC’s powers of persuasion.