Then the wires started buzzing from another ‘here today, gone tomorrow’ FCA chief executive with Tracey McDermott’s ‘heads up’ on a navigational shift.
She said: “We want to look at what is the best way of delivering advice and guidance across the market.” Then delivering the killer blow of, “so I wouldn’t rule out that there may be some element of commission, but we are not going to reverse the RDR”.
I headed to a dark room for an hour and undertook some deep breathing exercises.
Hector Sants stated at the FSA annual general meeting in June 2010 that the RDR cost would be £430mn.
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 it is no doubt now well in excess of that. In real terms that could have represented new runways at Heathrow or at Gatwick with change to spare.
If Sants and the regulator were builders doing your house extension (or digging out a basement if you live in London) a few questions may be asked about the estimation process.
Panacea was among the more than 290 parties to give oral evidence to the Financial Advice Market Review in November 2015.
Amazingly it quickly became clear that there was a considerable lack of understanding around many issues of IFA's RDR concerns. I think this is because there was a systemic failure to fully grasp 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 ever listen. The whole RDR thing was bulldozed through along with the wheat and chaff.
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, they need selling, something the ‘man from the Pru’ understood in the 1950’s and 60’s.
The maximum commission agreement during the 1980s was a perfect way to control bias by commission amount – the MCA was initially non-indemnity back in the day – then the Office of Fair Trading (OFT) perversely objected.
Using an unresolved conflict in government policy between investor protection and the belief in unrestricted competition, they had it removed.
