In 2014 Mark Garnier MP said the new RDR rules, which he estimated had cost in the region of £3bn at that time, “had resulted in far fewer advisers servicing a more limited demographic of clients, with less incentive to innovate”.
Later that year it was reported that RDR costs were heading toward £6bn and is no doubt now well in excess of that.
Panacea was one of more than 290 parties to give oral evidence to the FAMR in November 2015.
Amazingly it became clear there was a considerable lack of understanding around many issues of IFAs’ RDR concerns. I think this is because there was a systemic failure to fully understand how intermediated distribution works and why.
This failure to understand has been caused by a complete reluctance on the part of the regulator and the Treasury to listen. The whole RDR thing was bulldozed through, wheat and chaff together.
We advised the FAMR that commission was not a bad thing if fully disclosed and excesses managed. After all savings products are rarely bought by the mass market needing selling, something the ‘man from the pru’ understood in the 1950’s and 60’s.
The removal of the Maximum Commission Agreement, which during the 1980s had been a perfect way to control bias by commission amount, led to the huge commission override payments being made and the arrival of product or manufacturer bias and mis-selling, especially by the banks.
Responsibility is one of those words that politicians, government officials and regulators seem to shy from. Perhaps this will be the year that somebody, somewhere holds their hands up saying:
■ yes I got it wrong
■ yes I was told it would not work
■ yes I did not listen
and because of that:
■ I will take responsibility and resign. No pay off, no garden leave, no knighthood and no ‘revolving door’ employment for at least two years.
Derek Bradley, founder and chief executive of Panacea Adviser
