Regulation  

Long road to regulation

However, Mr Neilson does not believe all the RDR’s aims have been met, describing the overall picture as “nuanced”. He explains: “It is hard to see how the market is more resilient now in light of the difficulties advisers are facing in securing professional indemnity insurance.

“The related issue of poorly defined benefit transfer advice has done little to help with consumer confidence and trust, despite the great job most advisers do daily.”

Nick McBreen, an IFA with Worldwide Financial Planning, thinks the aims of RDR were laudable but ultimately too lofty to be realised. He says: “For the business world post-RDR, the regulator’s aim was indeed a big ask and for the most part has not been achieved.”

Mr Thompson agrees, highlighting an ever-increasing demand for advice, thanks to a combination of political, economic and social factors, including an ageing population, pension freedoms and intergenerational inequality. Approximately 750,000 people across the UK now retire each year.

Derek Bradley, founder of forum PanaceaAdviser, comments: “In terms of professionalism, it was positive, but it was not resilient, especially for smaller firms, as regulatory costs and limit increases from the Financial Ombudsman Service continue to have a negative effect. Regulation is a hungry beast and needs to be fed a lot, and often. Without that burden, advice would be cheaper.”

In a poll of 140 member companies, SimplyBiz members were divided over whether the rules derived from RDR and FAMR were working well. As Chart 2 illustrates, 52 per cent said yes, 41 per cent said no and 7 per cent were unsure.

Anonymised comments included: “It’s been relatively successful, but costs are far more expensive for clients and many have been priced out of the advice market.”

Earlier this year, a report produced by Garry Heath, director-general of trade body Libertatum, found that, despite the positive-sounding FAMR objectives, 5 per cent of advisers, a total of 1,650, have immediate plans to retire. Another 16 per cent, a total of 5,280 advisers, hope to retire in the next five years. 

And advice is still urgently needed, as Mr Thompson adds: “FAMR was tasked with finding avenues to provide affordable and accessible advice and guidance to everyone. However, to date FAMR has not achieved its goals and has not enabled the industry to offer meaningful financial guidance in support of a public service.”

The FCA was asked for its views on these comments, but did not provide a response.

According to Mr McBreen, falling adviser numbers, an ageing IFA cohort and ever-increasing regulatory pressures and process changes have not made the advice sector any more resilient or effective, despite FAMR findings.