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Consumer champion Phillips: FSA 'missed a trick' with simplified advice
by Michelle Abrego on Feb 07, 2013 at 16:06
Financial Services Consumer Panel chairman Adam Phillips (pictured) says the regulator could have done more to raise awareness of the RDR and develop simplified advice for consumers.
The Financial Services Authority (FSA) has missed a trick by not using the retail distribution review (RDR) to develop simplified advice, according to Adam Phillips, chairman of the Financial Services Consumer Panel.
Phillips said the regulator had failed to deliver policies aimed at establishing a framework for a workable simplified advice model and, alongside the Money Advice Service (MAS), could have done more to explain the RDR to consumers.
‘[We would have liked to] see good explanations to the public, which has kind of gone out by default along with helping the industry get to solutions that would deliver straightforward products or more straightforward advice at a lower cost,’ he said.
In the run-up to 2013, the FSA repeatedly ruled out lowering the RDR qualifications criteria for those giving simplified advice, and declined to give any guidance as to which products could be sold via a simplified process.
However, Phillips believes all is not lost. He argued that the rapid technological development of computer systems and greater understanding of product design meant it was time the Treasury and the regulator had another go.
‘It seems like a good time to revisit that area. The demand should be there because of the number of people who need to be saving and who don’t have the certainty over [how much] they’re going to have for retirement,’ he said.
Need for simplified products
In October 2011, the Treasury set up a steering group to look at developing simplified financial products, headed by Carol Sergeant, the former Lloyds Banking Group chief risk officer and FSA director.
The group has so far focused on savings and insurance products. Most recently it reviewed proposals for easy-access savings accounts, 30-day notice savings accounts and life cover products.
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