Garnier pushes for Treasury report card on RDR

Garnier pushes for Treasury report card on RDR

A leading member of the Treasury Select Committee is pressing for a review into the effects of RDR, three years on from its introduction.

The rules, which came into effect at the start of 2013, fundamentally changed the financial advice sector and have not been without controversy.

Conservative MP Mark Garnier said he is pushing his committee to examine how the rules are going given the further ruptures caused by April’s pension freedoms.

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He said: “Particularly I would like the TSC to look at the role of IFAs in this new pensions freedom environment and how they have been affected by the RDR.

“The problem with this is if you want a type of person not affected as a customer by RDR, they have high assets and high income.

“What is happening is that there are a lot of people out there with £10,000 or £20,000 pension pots and these are the people that really need the help on this.

“There has to be advice for these people that have to find advice from somewhere else, because they are no longer going to be served as they were before the RDR.”

Mr Garnier said he has spoken to advisers who are worried about giving advice on pensions and worried about the liability of giving that advice in the future.

He said one adviser in his Wyre Forest constituency had said the “nickel and dime” savers need the help but cannot get it if they have to pay £1,000 for advice.

One of the complaints made against RDR is that it created an “advice gap”, with advisers leaving the industry and the cost being pushed up leaving mid-market savers unable to get help.

According to the FCA, which is currently carrying out a review into financial advice with the Treasury, the number of financial advisers offering professional advice has dropped from around 26,000 in 2011 to 24,000 in 2014.

Mr Garnier, who has been on the TSC since 2010 and sat on the Parliamentary Commission on Banking Standards, said 80 per cent of IFAs are now focusing more on high net-worth clients.

David Thompson, managing director of business development and proposition at Axa Wealth, said: “One of the unintended consequences of the RDR was to alienate the mass market from the advice process.

“Frankly our industry is so risk averse at the lower end of the market, most will not entertain any form of advice risk here in the current market.”

The FCA and Treasury’s joint review of the financial advice market is expected to result in policy announcements in the 2016 Budget.

Adviser view

Scott Gallacher, a chartered financial planner with Leicester-based Rowley Turton, said: “I think financial services suffer from being meddled with far too much and I think we are only in phase one of RDR. I don’t see the value of starting tweaking RDR again.”