FSA retail distribution review

stevepett

sandsy wrote: »

and IFA policies actually have slightly worse experience than those sold by tied advisers:

http://www.fsa.gov.uk/pubs/other/Persistency_2009.pdf

I have looked at the document and that is the opposite of what it says!

The FSA has sunk to news depths with the RDR by suppressing its own research in favour of using older research from Australia which happens to agree with the FSAs view - unlike its' own research!

Why are they so determined that Middle England be left to the tender mercies of the banks who are more than thirty times as likely to give bad advice than IFAs (according to Financial Ombudsman Service statistics).

There are good elements in the RDR, and had the FSA been willing to enter into a debate with the overwhelming majority of IFAs who think they have got it wrong. it just might have ended up benefiting ordinary consumers rather than just the wealthy.

Incidentally, I am NOT an IFA.

stevepett

The FSA love big institutions - when one messes up badly, they force them to pay tiny fines of less that 0.1% of turnover - i.e. petty cash.

If an IFA makes a mistake, the fine will always be life threatening to the business! But the bigger the IFA, the lower the percentage of turnover the fine will represent.

Interestingly, FSA research indicated that the larger the firm the greater the likelihood of bad advice, which means that the smaller IFAs the FSA is trying to drive out of business are (mostly) the best in the business. The older and more experienced an IFA is, the less likely they will be to sit additional exams which are often irrelevant to the actual work that they do. Most IFAs have no problem with anything designed to raise standards, but the FSA needs to raise it's own standards of integrity and competence substantially before it lectures anyone else.

No one know the retail financial services market better than IFAs, who are the very last people that the FSA will listen to! Why?

To be honest, consumers would be far better off without the expensive and feeble protection offered by the hapless FSA as both local Trading Standards and the Courts do a far better job at protecting the public than the FSA ever has.

After the RDR goes through the public will foot the entire bill, not IFAs!

Loughton_Monkey

stevepett wrote: »

To be honest, consumers would be far better off without the expensive and feeble protection offered by the hapless FSA as both local Trading Standards and the Courts do a far better job at protecting the public than the FSA ever has.

After the RDR goes through the public will foot the entire bill, not IFAs!

I agree the whole thing will be a 'Horlicks' as these 'Government' things always are. But the trouble is the wideness of the subject. If you look at other 'professions', we tend only to need them from time to time. [Doctors, Solicitors, Accountants, Dentists.....]

Every person deals with money every day. Nobody can be sued if I choose to put all my cash under the mattress. So I take it down to Santander and put it in a 0.5% savings account, can they be sued for not telling me that a 3% account was available?

So a little guy pops out of his office and 'sells' me a Stocks & Shares ISA. Is this good? Is it bad? How does that change if I don't read any of the stuff he gave me, or the stuff I signed?

I have 'joked' in the past about a "License to buy". Actually, the more I think about it, the more I tend to think there is some mileage in it. Imagine three 'groups' of products. First group Current Accounts, Savings Accounts, Cash ISA's etc. Second Group Pensions, Stocks & Shares ISA's, Funds, Sharedealing, etc. Third Group Pension Drawdown, Structured Products, Leveraged Funds, Hedge Funds etc.

Group 1 available 'over the counter'.
Group 2 avialable by 'prescription' or 'license'
Group 3 available by prescription only.

Any of us who feel educated and savvy enough (I would hope the majority) to understand what is written and to make our own decisions and most importantly sign to say we stick by our own decisions would have that 'license' and could freely phone up Legal and General and buy our pension. Those without, would need the 'prescription' from the IFA.

IFA's would, like doctors, have to stand by their professional ethics and knowledge. Sadly, they would have to do a full financial review before issuing any 'prescription' but theoretically this is worth more in the consequent 'excellence' of their advice (!!).

And the last group, of course, is quite a complex set of products. The IFA would concentrate on whether or not the purchaser was fully capable of understanding the type of product he is buying.

So the intention, I think, should be to make it absolutely clear to people that they should 'put up, pay up, and shut up' when buying financial products, or pass across some of the professional responsibility to a 'professional'.

That leaves scams, misleading documentation, errors etc. by financial institutions which should, of course, be persued rigorously by bodies such as Trading Standards etc.