For larger advisory firms there has been a steady decline in average pre-tax profits per adviser. Single adviser firms having the highest decline.
Mass market potential users of financial advice are just not encouraged in the way they were pre-RDR.
Financial services products then were in most part sold, not bought. The very core process that was designed to provide access to all the things RDR was supposed to do was the architect of its own failing for the masses.
And of course, a true indicator of RDR working is to be found in consumer detriment data.
Are consumers still being miss-sold or scammed, yes and in ways that the RDR had not perhaps even thought of or was intended to stop.
The 2021-22 FSCS budget was planning for £833mn of detriment, an increase on the 2020-21 figure of £700m.
The Treasury Committee noted in a June 2022 report on the future of financial services regulation that “the FCA should make every effort to ensure that it is not designing or implementing regulation in a way which could unreasonably limit the provision of financial services to consumers who might benefit from them”.
The report notes: “The government has said that it intends to introduce a new power for the Treasury to be able to require the FCA and PRA, or an independent person, to review FCA or PRA rules where the Treasury considers that it is in the public interest.”
10 years later that is where we are, lost in the ether of regulation and legislation. A classic case of regulation bayonetting the wounded. In this case, both the consumer and the advisers all at the same time.
I would summarise that you could not make the RDR consequences up, but as we all know, with regulators and politicians you actually can, quite easily.
Derek Bradley is the founder and chief executive of Panacea Adviser
