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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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4 comments so far. Why not have your say?

The consumer panel (along with the other two FSA independant panels) should speak up more on issues like this. Its rare to hear from them at all.

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The sad thing is that a robust simplified advice process is not beyond the capabilities of man to design. The availability of such a system may have helped to build the numbers of consumers engaging with their financial futures, in much the same way as the Pru and the like did until the cost of regulation made it unviable. Not that I am saying a return to those days of toe in the door tactics is desirable, but it did mean a higher percentage of the population had something to look forward to.

Let's hope that the FCA takes this on board and does more to increase the public's appetite for financial services.

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It's a little late to imply that bancassurers driven out of the market by RDR were not providing suitable advice.

My understanding is that profitability is the main stumbling block for simplified advice. Perhaps the focus should be on the rather tired looking basic advice / stakeholder regime.

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Mr Man

Feb 08, 2013 at 14:37

The FSA didn't miss a trick at all. The IFA community now only offer "simplified advice" .

It has been the view of the regulator for some time that simplified advice is all the IFA market can be trusted to provide and they have been regulated accordingly to do just that.

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