Regulation  

Nobody could be ready for the RDR ‘changing canvas’

Wolverhampton-based Midlands Investment Agency has been conducting business for the last 40 years, led by IFA Martin Dodd, and so it has seen its fair share of regulatory changes.

Perhaps unsurprisingly, therefore, the firm was ready and fully compliant by the end of last year with the new rules coming under the Retail Distribution Review. However, Mr Dodd suggests these rule changes continue to pose a challenge because the RDR regime is an “ever-moving canvas”.

“We were as ready as anybody could be, but to say completely ready? I don’t think anyone could be. There is stuff coming out even to this day about RDR that we didn’t know about and I imagine the regulator did not know the implications either, so was anybody ready? The regulator wasn’t ready.”

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Mr Dodd did not have any qualification issues to deal with - the major bone of contention for many - as he was already diploma qualified and is one step away from achieving chartered status.

“I’ve carried on taking examinations and am about to sit the final qualification exam for chartered status, so I am going to carry on and even when I’ve got chartered I will still carry on.”

When asked whether he enjoyed it, Mr Dodd replies: “I wouldn’t put it as strongly as that! But I think it’s good for all of us to revisit our qualifications and keep them as up to date as possible – it can’t do us any harm.”

Unintended consequences

Unintended consequences is now a well-mooted term in the post-RDR market and Mr Dodd believes more things are being uncovered “which no-one really envisaged”.

As an example, he flags up the evolving relationship between HM Revenue and Customs and the Financial Conduct Authority and how the former interprets the rules. Issues such as taxation of on platform rebates and adviser charges have seen the revenue get into quite a muddle.

“This is clearly something that has caused issues. There are certain areas of advice that are now intensely complicated because of how HMRC has interpreted the regulations.”

Mr Dodd cites the example of investment bonds, which he claims are “probably dead in the water now because of the taxation of adviser fees and income withdrawal payments being made from investment bonds”.

“That was never intended I’m sure but no doubt, this issue has been caused by the RDR.”

Another RDR consequence, albeit not one that could be termed ‘unintended’, is that due to the move to qualifications the industry lost advisers who were not willing to sit exams. Prior to the RDR, MIA had two advisers as well as Mr Dodd, but one of these left due to the RDR.

“The other adviser has given up his permissions to act as an adviser. It was very much about qualifications and his age. He had previously passed exams on two occasions to reach the benchmark required and didn’t want to go through it again.