The Retail Distribution Review and Mortgage Market Review must be re-examined by the Treasury Select Committee as soon as possible, according to one member of parliament seeking re-election to the influential government panel.
Speaking at an event yesterday afternoon (2 June), the Conservative MP for Wyre Forest Mark Garnier stated that a review of the regulatory changes was needed to ensure they have been implemented correctly.
Both regulatory regimes have come under fire, with the industry asserting that due to the ban on commission, many people can no longer access advice and that some lenders are going above and beyond the MMR requirements and as a consequence some borrowers are “trapped”.
Mr Garnier questioned whether the RDR had done enough to close the advice gap, stating: “You need £100,000 in assets or £80,000 in income to be able to get someone to talk to you.”
Speaking at the 2013 Association for Professional Financial Advisers’ annual dinner, Andrew Tyrie said the Treasury Select Committee will not launch an investigation into the RDR until at least 2015 to allow for the full changes of the effects to be understood.
In December last year, the Financial Conduct Authority published several papers making up its post-RDR implementation review.
The review, conducted by Europe Economics, was generally very positive about the reforms, particularly the move to explicit fees and professionalism, however it said “more time will be needed” to see whether any improvements translate into better consumer outcomes.
It added that the RDR has led to improvements in information disclosure, but argued consumers are still confused over charges and the differences between independent and restricted advice.
Following this Mr Tyrie reiterated that the Treasury Committee will question the FCA this year on the post-implementation RDR findings to ensure that the expected benefits of the regulatory reforms flow to consumers.
Mr Garnier also confirmed that while he will seek to be re-elected to the select committee at a vote later this month, he will not oppose previous chairman Andrew Tyrie’s re-appointment.
Responding to comments from the audience claiming that IFAs complaining about the RDR were “peddling rubbish” and “self-serving claptrap”, Mr Garnier stated that the industry was still in a period of adjustment and he was more worried about establishing a savings culture in the UK.
He also indicated that whilst in parliament he would do his upmost to reign back any further financial legislation, in order to give banks the chance to bed in the post-crisis regulation.
“We must nurture the industry, being critical friends rather than beating banks with a big stick... let’s back off and give them some moral support.”
Speaking at the same conference was the Financial Conduct Authority’s chief executive Martin Wheatley, who also backed early intervention in terms of financial education in schools and agreed that ‘banker bashing’ was not the right course.
When questioned about the issue of insistent clients trying to transfer money out of defined benefit pensions and into defined contribution schemes, in order to access the pension freedoms, he said that the regulator plans to issue further guidance to advisers about how to deal with such requests.