Treasury slams FSA over RDR
In a letter addressed to Hector Sants, chief executive of the FSA, Tyrie said: “You will be aware that last Thursday the FSA circulated an embargoed response to our RDR report, rejecting in a peremptory manner our recommendation of a one year delay to the RDR’s introduction. This was issued within hours of the embargoed copies of our own Report being distributed.
“The Committee has discussed this. We deprecate the Authority’s action. It was precipitate, giving the impression that no adequate consideration had been given to the arguments for the delay we recommend. This is unacceptable.
“I will be placing this letter in the public domain.”
Last week MPs on the treasury committeeissued an embargoed report calling on the Financial Services Authority to delay implementing new rules on the provision of financial advice for 12 months.
The committee backed plans to ban commission on advised sales and impose higher professional standards on independent financial advisers, subject to flexibility on a case-by-case basis, but were concerned that a substantial exodus of experienced advisers from the market could harm consumer choice.
The Financial Services Authority then issued an embargoed rejection of recommendation.
The regulator said it recognised the TSC report’s recommendation on timing but remained committed to implementation from January 2013.
The FSA said: “The FSA recognises that the RDR is a significant structural change for the industry and therefore it is right that this is subject to careful scrutiny.
“The RDR is already a long-running initiative with the first consultation paper published in June 2007.
“There is clear evidence that the industry is well advanced in its preparations, with 49% of IFAs already qualified and at least 82% expecting to remain as retail investment advisers.
“Many of the report’s recommendations relate to the importance of monitoring the market place to ensure that the RDR’s goals are being achieved. The FSA is committed to ongoing monitoring and recognises that it is important that its proposed successor organisation, the Financial Conduct Authority, continues this work.”
The TSC report suggests a cliff-edge date for advisers to achieve the RDR recommended qualifications be removed.
The FSA said: “In terms of qualifications, the FSA recognises the importance of being flexible. Formal exams are not always required, there are a number of alternative means of attaining the qualifications, and there are circumstances where exemptions can be obtained.”
The FSA added that it would provide a formal response to the TSC in due course.