Independent Financial Advisers up and down the country have been lobbying hard to bring MPs' attention their many concerns about the progress and implementation of the Retail Distribution Review. A few months ago you would have said they were wasting their time as all the arguments had been heard before and had failed to shift the Financial Services Authority from its chosen course. A combination of IFA perseverance and alot of new MPs still keen to engage with businesses in their constituencies has produced a result that few, including the FSA, expected: RDR back on the political agenda with the resultant pressure on the regulator to re-think some of its proposals.
The big break though came a couple of weeks ago when the Conservative MP for Wyre Forest, Mark Garnier, secured a two hour debate on the floor of the House of Commons. Over 40 MPs from the three main parties spoke in this debate and about twice that number attended it, both unusually high figures for such a narrow, specialist topic. There was very little disagreement among the MPs about the need to re-visit RDR. There was alot of focus on grandfathering rights, concern about the amount of time required to compete the new qualifications, the costs - put at £1.7bn, the rigid requirements on fees and the fear that many experienced IFAs would leave the market. This was estimated by Mr Garnier at as many as 10,000, a figure not disputed during the debate. It was a scenario that alarmed many MPs from rural constituencies who feared that IFAs could become as scarce as Post Offices.
These concerns did not get alot of house room from the government as Mark Hoban, the Financial Secretary to the Treasury, largely defended the FSA and the RDR, although he did try to offer some reassurances on where the costs would fall. He did, however, acknowledge that this issue is now firmly on the political agenda. The Treasury Select Committee has said that it will take evidence on the subject very soon which will ensure it remains very much a live political issue.
In the meantime, the All Party Parliamentary Group on Insurance & Financial Services will also be examining the issues raised by IFAs at its last meeting of the year next Wednesday when it will hear from the Association of Independent Financial Advisers, the Chartered Insurance Institute and the Financial Services Authority. The meeting takes place in Committee Room 18, House of Commons at 4.30pm on Wednesday 15 December and it is open to the public.
Two months ago I would have said there was no chance of re-opening this debate and even less of changing the FSA's mind on any of the issues. Now I am not so sure. I think if IFAs keep a tight focus on two or three key issues they could win some concessions. The trap I see looming is that some IFAs are in danger of getting abit gun-ho and seem to think that they now have a chance to force the whole RDR back to the drawing board. They don't. What they do have is an opportunity to limit the more draconian aspects of RDR and, crucially, reduce the financial and administrative burden on them and their business. They just need to keep focused on objectives that are achievable.
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