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FCA to face grilling on Heath’s RDR claims

FCA to face grilling on Heath’s RDR claims

The dispute over the effects of the Retail Distribution Review (RDR) continues to rumble on with a committee of MPs due to quiz the Financial Conduct Authority (FCA) on the Heath Report.

A spokesman for the Treasury Select Committee said MPs would be asking the FCA about the Heath Report, produced by director general of trade body Libertatem Garry Heath, when the regulator next appears before it for its bi-annual hearing.

But he said any decision to call Mr Heath as a witness would require a meeting of the committee, which wouldn’t happen until after the EU referendum.

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The Heath Report, which was published in March 2015, stated that since RDR, 13,500 advisers have left the industry.

The report also stated that post-RDR, 16.5m consumers no longer have access to advice via banks and IFAs.

In the report, Mr Heath argued that the regulator’s excuse for introducing RDR was to save £223m a year caused by mis-selling.

He claimed the annual cost of the RDR, which introduced a requirement for advisers to have a level four diploma qualification and introduced customer-agreed remuneration, is £340m and rising.

But the FCA has disputed both these claims, stating first, that adviser numbers have dwindled for reasons other than RDR, and second, that Mr Heath has not compared like with like when he contrasts the number of consumers who have received advice historically with the estimated capacity for advice at a particular point in time.

MPs confirmed they would quiz the regulator on Mr Heath’s claims after he wrote to the Treasury elect committee offering himself as a witness in an inquiry on his report.

In the letter, Mr Heath said: “The FCA made much of its so called ‘independence’, but one man’s independence is another’s unaccountability.

“Most of your recent witnesses have been part of the system and dependent on it. The Treasury Select Committee might find our evidence on RDR, regulation and accountability both illuminating and refreshing.

“It may well unite a number of strands of your research into one cohesive force.”