The Retail Distribution Review has been an “absolute disaster” as it did not achieve the objectives outlined in 2006, the Centre for Policy Studies has said.
Speaking at Dentons Pensions’ Sipp breakfast seminar this morning, CPS research fellow Michael Johnson said: “RDR has been an absolute disaster, look at the six objectives outlined by [Financial Services Authority head] Callum McCarthy at the Gleneagles conference.
“The first one is to broaden the availability of advice. The second one is to curtail the cost of advice. The RDR has achieved very little.”
The six RDR objectives outlined by Mr McCarthy were:
• An industry that engages with consumers in a way that delivers more clarity for them on products and services;
• a market which allows more consumers to have their needs and wants addressed;
• remuneration arrangements that allow competitive forces to work in favour of consumers;
• standards of professionalism that inspire consumer confidence and build trust;
• an industry where firms are sufficiently viable to deliver on their longer-term commitments and where they treat their customers fairly; and
• a regulatory framework that can support delivery of all of these aspirations and which does not inhibit future innovation where this benefits consumers.
Mr Johnson added the only thing the RDR has achieved is to improve the quality of professional firms and “put a number of weaker ones out of business.”
Over the last year, there has been much talk of simplified advice models to help address those who cannot afford advice.
Earlier this month, the Financial Conduct Authority said it is set to launch a consultation on simplified advice within the next quarter, with the aim of eventually publishing financial guidance.
Giving evidence to the Treasury Select Committee on 4 February, FCA head Martin Wheatley came under fire from Andrew Tyrie, Treasury Select Committee chairman, who demanded answers as to whether consumers could confuse execution-only with advice when using a web-based advice system.
Mr Tyrie asked Mr Wheatley if it was possible for a firm to give advice on the web without human intervention, in which Mr Wheatley said “yes”.
However, Mr Johnson dismissed the idea of simplified advice, by stating: “What’s the point of simplified advice when we haven’t got simple products?”
When speaking about regulation, Mr Johnson said he has “enormous sympathy for advisers”.
He said: “Advisers are first and foremost distributors and not advisers.”
In January, independent advice firm Penguin Wealth revealed plans for a web-based advice service launch targeted at small-pot clients.
On 6 January, another web-based proposition launched aimed at people who are new to investing or existing investors who have pensions, Isa and bonds, and who need advice but cannot afford the fees charged by advisers.
Clients will pay a flat rate of £300 a year, with no upfront fees, and will have access to an adviser team via a range of online channels including Skype, email and live chat.