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FCA chief Wheatley admits concerns over advice gap

by Michelle Abrego on Sep 10, 2013 at 11:12

FCA chief Wheatley admits concerns over advice gap

The Financial Conduct Authority (FCA) had admitted concerns over the banks dropping out of advice due to the retail distribution review (RDR).

Chief executive Martin Wheatley said that the lack of availability of advice to the mass market was a concern while giving evidence to the Treasury Select Committee this morning.

Following a question from TSC member and Conservative MP Mark Garnier who asked if he was alarmed by the banks pulling out of advice, Wheatley said: ‘It is a concern. People who have... below £50,000 or £100,000 are not getting the same service that they were getting. That is a concern.'

Wheatley (pictured) said that the RDR has been a success in terms of introducing better transparency and the removal of product bias but there was an issue over the gap created by banks’ move to pull out of advice.

He questioned whether the banks had offered proper advice prior to the RDR and said the FCA understood that the mass market could not afford to pay for full advice.

‘You can question whether it [bank advice] was advice or if it was sales… most banks and advisers have worked out you can’t provide a fully advised service. Full advice service is five to six hours of work and that costs and therefore that [bank] model, we’re seeing less of it.’

Wheatley backed new web-based services to emerge and fill the advice gap and 'offer advice in a different form’, but conceded this evolution was still a work in progress.

He added that while some banks and insurers have shied away from advice completely others were still trying to form cost-effective advice propositions to the lower-end of the market.

'That part is honestly still in transition,' he said.

Barclays closed its advice arm in 2011, followed by HSBC closing its tied advice business in April 2012. Lloyds closed its mass market advice service in November 2012, while Santander cut its advice service in early 2013.

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149 comments so far. Why not have your say?

RegulatorSaurusRex

Sep 10, 2013 at 11:17

Better to have no "service" than be ripped off.

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Paul Claireaux

Sep 10, 2013 at 11:21

Surely it's good news that they're not getting the same service !

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You must be joking

Sep 10, 2013 at 11:23

Why on earth would it be a concern that those with "below £50,000 of £100,000 are not going to get the same service" from BANKS?

Flogged investment bonds, when ISAs and collectives would have been more tax efficient;

Flogged Corporate Bond funds, and told that they were 'like cash deposits';

Flogged SCARPS, with no explanation of risk;

The banks did a bloody awful job, as RSR puts it "better no service than be ripped off"!!!

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Confused

Sep 10, 2013 at 11:23

Dear Martin

Here is one thing you can do to cap and reverse the gap. Please do not make any more changes to anything. I am building a growing business in the new environment, and we are excited about the positive outcomes of RDR, of which there are many.

But please do not continue to push forward new bits of legislation where the outcome is uncertain. I need certainty in order to grow the business. I have taken on 3 former bank assurers. We will deal with the advice gap. But we like any other business need certainty and at the moment, you are not providing it. Whether it is by direct communications or by rumours, there is too much disinformation around and we just need to be told that we can have a few years to get to grips with the large changes already made.

Yours truly - in commitment to good, fee based, clear financial advice.

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Hickky

Sep 10, 2013 at 11:23

Martin, I have a proposition for you. Why not re-instate commission payments but cap them at, say 4%? This will provide sufficient for a load of local IFAs but cut out the high cost advisers who are only looking for HNW. Retain training requirements but if banks can provide a profitable service at this commission level, then let them start their services again. Mind you, I would prevent them using their own in-house funds unless there are very stringent cross subsidy arrangements in place.

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Chartered Mark

Sep 10, 2013 at 11:26

And of course no one at the FSA/FCA could have foreseen that this may be a consequence of the RDR?

Just remind me, how much do we pay these people?

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Jonathan Kirby

Sep 10, 2013 at 11:28

But the point is that they have thrown out the baby with the bathwater.

Yes the banks were in the main acting in their interests not their 'punters'.

However, there were a great number of good IFA's who have given up because the new rules have made their business, servicing the less well off, un-viable.

Removing servicing commission, which is firmly on the FCA agenda will only make matters worse as many more disappear.

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PB2

Sep 10, 2013 at 11:28

They have cropped Martin Wheatley's picture too much. You can't see the light bulb that has just come on above his head !!

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DP's IFA

Sep 10, 2013 at 11:29

Fancy That! Did not see that one coming!!! Well done the FSA. However no great shame it's the banks that are withdrawing. Next thing you know Mr Wheatley will acknowlege the FSA messed up the whole Capita/Arch Cru affair.... Think not!

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PaulB via mobile

Sep 10, 2013 at 11:30

All a bit too late Martin and I note you make no apology to the many IFA 's who told the FSA this year after year with no response at all. It seems to advisers that their views are never ever considered or seemingly worth the regulators consideration ? Yet we provide a lot of the funding for when things go wrong (at the banks) ,even when we are not involved ,why?

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Richard R

Sep 10, 2013 at 11:35

Yes, RDR has been a huge success ! It's created a new breed of highly qualified form completing box ticking CPD driven adviser who no-one wants to pay for.

How on earth did that happen then?

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Rob Simpson

Sep 10, 2013 at 11:36

We have had a small number of new enquiries from people who have asked their bank for investment advice and been signposted to an IFA like ourselves. We have then advised them accordingly.

Its only been eight months since the RDR changes so what proof is their that an advice gap exists?

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Chris Miller

Sep 10, 2013 at 11:41

Basically the FSA dropped a 'daisy cutter' on the mass market.

As the mass market forms the bulk of the UK population looking for financial advice, then well done you intellectual midgets. Job done in the name of so called 'transparency'.

Whether it's fees or commission, it's perfectly possible to be transparent, given an open way of dealing with clients.

The same is true for making costs LESS transparent. We all know the ways in which this can be achieved by the less scrupulous whether its fees or commission.

Nice work numbskulls and a snip at £1.6 BILLION!!!!!

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RegulatorSaurusRex

Sep 10, 2013 at 11:41

To be fair Martin wasn't involved in the making of this disaster movie.

To be even more fair the RDR was nearly cancelled by Sants and co but the Board voted to keep the train on the rails.

My worry is that Martin has expressed concern that the banks have pulled out of the market without mentioning the distribution model that generates so few complaints.

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Simon Templar

Sep 10, 2013 at 11:47

NO Crap Sherlock...you are the idiots that encouraged change now its a case of stable door bolted...mindless idiots!!!! your and the Government are clueless!!!! of course you will get a Knighthood like Hector...

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Richard Hardy

Sep 10, 2013 at 11:48

If they cut the amount of necessary paperwork and cut the overburdening compliance we may be able to offer a more affordable service.

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Jonathan Kirby

Sep 10, 2013 at 11:48

@ RegulatorSaurusRex

RDR was nearly cancelled by Sants!

Are you sure?

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Chris Geeson

Sep 10, 2013 at 11:52

We told you what the outcome would be years ago and then we told you again and again right up to the point that you, apparently, have recognised the problem for yourselves. Why did you not see the outcome why did the fsa not see what Ivory Tower building the RDR would cause why did you not see we would be forced to deal with the few who can afford what we do and only them due to costs.

I know some fee based companies will say how well they are doing but this was not supposed to be about us it was supposed to be about cleaning up the industry so all could benefit and it is obvious as we have said for so long that the "all" concerned will be mainly the rich then.

So in summary the powers that be now recognise that the loss of upteen good advisers and the shutting of many good advisory companies caused by RDR has taken away the avenue to almost any advice for those who most need it.

I think if this was a law court the prosecutor would just be about to rest their case confident of a conviction and its a damn shame that no one will carry the blame for this.

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Chris Miller

Sep 10, 2013 at 11:52

I reckon Regulator S Rex IS hector sants. C'mon, give us your REAL name.

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Bob Donaldson

Sep 10, 2013 at 11:58

It is too early to see the full consequences of RDR apart from the fact that the number of advisors has fallen dramatically over the last three years, the banks have stopped giving shoddy advice and pulled out the market for virtually everything including lending, advisors have got themselves better qualified and many have moved up to wealth management .

Oh and yes people who used to get advice from the likes of direct sales and advisors who had the time to deal with them no longer can do so because it is time and cost prohibitive.

Yes Mr Wheatley the FCA and the FSA and all its predecessors have done a good job of killing an industry that created some real value for clients. Don't worry though your decisions trees and money advice service will fill the gap.

Job done you can now take a big fat redundancy package and jog on!

From one advisor who used to love the industry and all it offered to one who loathes its overburdening bureaucracy.

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GKP

Sep 10, 2013 at 12:00

Nothing will be done about the 'advice gap' because the FCA and the FSA before them don't/didn't believe advice is necessary.

The expectation of the regulator was that when the public were told how much they would have to pay for advice in cash terms it would be shunned. The public could go to MAS, to Hargreaves and to St. James Place, where there are no fees for advice (read out loud in a sarcastic manner) . As far as the regulator is concerned, IFAs are surplus to requirements - oh, except when it comes to paying for everyone else's mistakes.

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Barman

Sep 10, 2013 at 12:01

I too would like some evidence of this supposed 'advice gap' just exactly what is it and how on earth do you scope it? If its simply anyone with less than £50k then the vast majority of the population is included within it. And why assume that everyone needs the services of a financial adviser?

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Dee

Sep 10, 2013 at 12:01

We should of course remove knighthoods etc from former FSA idiots who caused this, arrogantly refusing to accept input from people who actually understand financial services who were pointing out the "advice gap", and reclaim all of the bonuses back from all those involved in RDR.

In fact, all those who were involved in any of the FSA failures. And move Sants and his Parliamentary supporter Hoban into the Tower of London. Don't let them share a cell though, enough is enough!

And to join them, all those "We are professionals" IFAs who blindly supported it thinking that they would make a killing....

And as for the MAS? Ye Gods....

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Julian Stevens

Sep 10, 2013 at 12:01

"People who have... below £50,000 or £100,000 are not getting the same service that they were getting". This is not just because the banks have mostly pulled out of flogging whatever product happened to be paying the highest commission at any given time. It's because IFA's and restricted non-tied intermediaries are so entangled and buried in red tape that they can no longer afford to provide advice on investments of less than £50,000 (some have said more, some have said less, the latter I suspect because they're still prepared to take their best shot at whatever comes their way).

The exit from the market of bank-based product floggers is probably no great loss (an admission that they just can't hack it in the new world). But the exit from the mass market of decent, diligent and honest Financial Services Intermediaries (FSI's) almost certainly IS a cause for concern. Mr Wheatley needs to take a critical look not just at what has brought about this state of affairs (excessive, unaccountable and self-serving bureaucracy) but whether there was anything fundamentally wrong with the way most FSI's operated before the FSA's RDR Red Button Day. 1% of all complaints referred to the FOS (and only 45% of those upheld) rather strongly suggests there wasn't and that the massive salvos of additional procedural requirements gleefully carpet-bombed onto the FSI sector has done considerably more harm than good.

I don't have a problem with AC in place of commission. But my clients and I most certainly do have problems with everything else bolted onto the original RDR framework. A client said to me the other day: It's all b****cks but I understand you have to do what you're told.

Before much longer, members of the public will start complaining to the FSA about having all this crap in which they have no interest and for which they certainly don't wish to be forced to pay foisted on them by compulsion.

Most clients want to know just three things:-

1. What's the proposition?

2. What's it going to cost me? And

3. What are the risks?

Mr Wheatley would do well to bear this in mind if he's genuinely concerned about the damaging effects of back-breaking over-regulation..

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Chris Moseley

Sep 10, 2013 at 12:06

Brilliant. You couldn't make it up

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sol trader

Sep 10, 2013 at 12:06

I wonder, to what extent does Mr Wheatley feel obliged to defend the actions of his forbears and, to what extent is he now falling into the politicians / quangocrats m.o. of assuming the great unwashed will simply accept his assertions on the basis he is an agent of democratic authority?

To say RDR "has seen success in terms of introducing better transparency" is cleverly worded. It implies investments are now transparent but takes responsibility for practically nothing. I confess, I have far less of a clue, post rdr, as to how much investments actually cost. I feel, intuitively, they cost more now.

I am pleased to hear Product bias has been removed. Does this mean we can switch away with impunity? I doubt it.. I strongly suspect those who sought to earn maximum commission in the past will carry on seeking maximum fee and could easily tailor their recommendations accordingly

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Richard Arnold

Sep 10, 2013 at 12:07

Sent to the Treasury Select committe 16th March 2011

Feedback : TSC 8th March sitting. Mr H Sants and Sheila Nicholls providing evidence.

Not commenting on individual responses from Mr Sants and Mrs Nicholls but rather more “in the round” they appeared to be ill-prepared, poorly informed and lacking in ability to promote clear and concise confidence on the subject matter. If the subject matter were not so serious this could be used as student training material on how not to conduct yourself in a career interview!

This can only emanate from either a lack of respect in preparation for the TSC or a manifest attitude of un accountability or simply incompetence. Either is unacceptable and insulting to both the TSC and the industry as a whole.

I feel it is vital that key members of the Treasury select committee re-watch the Parliamentary TV recording of the evidence provided by Mr Sants and Mrs Nichols. The evidence provided is not limited to just spoken word. You will note their progressively deteriorating body language. Vagaries of assurances offered by Mrs Nichols when referring to FSA research of which she clearly had little or no retained knowledge. And some very muddled answers that unfortunately were not always pursued by the TSC.

Mr Sants often answered questions while gesturing, as if speaking to Mrs Nicholls, indirectly seeking reassurance from Mrs Nicholls, indicating that he does not entirely have confidence or belief in the answer his giving.

Sants and Nicholls are at the most senior levels of the FSA and have been promoting and steering the RDR since 2006. It is appalling that they do not have significant key information committed to mind. At their level in an organisation they should have retained knowledge that promotes confidence and enthusiasm to both promote and carry through their initiatives. This would be a prerequisite in any commercial organisation.

As a diversion, I am minded to compare the TSC meeting with a presentation from budding entrepreneurs in an episode of the Dragons Den!

We must remember what is being requested by way of an investment which is a total of £1.7 billion of which £.1 billion will be spent in the first 2 1/2 years of five-year plan. (Ponder on that figure for a moment. One Billion Pounds completely un necessary!) What is being promoted is a massive re-engineering of the existing industry of which the outcome is both uncertain and offers no guarantee of any change in consumer detriment. Ultimately this cost has to be recovered from the consumer.

The £1.7 billion is being sought at a time of significant economic pressure where both business and consumers are painfully addressing the consequence of serious national debt of which the only road to recovery is growth and efficiency.

The Dragons firstly need to establish the certainty of achieving a return on their capital. The budding entrepreneurs need to communicate clearly and effectively their business proposition and demonstrate they know the facts and figures.

By utilising their personal experience the Dragons will expose any commercial weaknesses in the proposal or indeed that it has compelling opportunities.

One of the most important outcomes of this process is when the Dragons encounter entrepreneurs that appear to be in denial to the commercial realities, or delusional in the face of a commonsense or logic. At this point the Dragons plead with the entrepreneurs to swallow their pride and cut their losses as the most sensible commercial decision no matter how bitter the pill.

This scenario has a direct parallel with the FSA's RDR.

You know it, the adviser community knows it and the banking sector without the prospect of simplified advice also knew it.

At what point does wisdom and commonsense prevail?

I do not see how the pending European legislation and the necessity for the RDR to be implemented prior to this as a logical argument. The only defence offered by Mr Sants being the risk of a further two years of perceived consumer detriment. I would suggest that the TSC look more closely at all of the supporting evidence provided by the FSA with regard to “current” consumer detriment. I believe it is overstated by the FSA in the extracted statistic of file reviews. Indeed in the TSC meeting Mr Sants referred to data emanating from file reviews and qualified that in a recorded file review failure, the majority do not relate to mis-selling but simply compliance failures which has no consumer detriment. He made reference to the endowment mortgage pensions miss selling error which is simply unacceptable as this occurred many years ago and mocks the last 10 years of regulation which has been applied to address these issues. Similarly, the FSA should be challenged on their assertion that there is a lack of consumer trust with regards to IFA firms. There is significant evidence that shows that this is the last remaining sector in the financial advice industry that still has and commands significant consumer trust and this has been growing exponentially since the so-called beginning of the credit crunch era and the acrimony shown towards Banks in general and there miss selling in particular.

The FSA needs to understand that the perfect world does not and will not exist. You cannot eliminate individual isolated poor practice no more than apathy and indifference from some consumers. You can learn from other areas where consumer detriment can be best combated by the consumer themselves. For instance take the police and its ability to deal with domestic burglary. The best approach has been to educate the public to be more aware and improve personal security in the home

together with initiatives such as neighbourhood watch. ie. engage the consumer.

Similarly, the NHS,s ability to deal with the growing problem of obesity is to educate the consumer on healthy diets and lifestyles. Initiatives such as the “five A day” which is now understood and taught at primary school level and is intuitive in society.

The regulator is bereft of initiatives and ideas in this important area, mainly because of a lack of experience of client facing interaction. I am confident that if you ask 100 adult people if they are aware that the CFEB money made clear exists, 95% to 100% will say NO! This is not consumer education it is lip service despite being a great resource.

The RDR should be scrapped pending both European legislation and of course the current economic climate that we all operate in. If consumer detriment needs to be tackled it could be done by low-cost initiatives that truly engage the general public and the financial services customer specifically.

For example;

Create some key reference points that can become a part of everyday financial

life and part of financial education starting at the most appropriate school age.

ACT (Strap line – “Its your money, ACT Sensibly” Etc Etc)

Stands for A Advice and continued Service Charge ( ASC Understand and agree the

cost)

C Compare ( Compare other advice options)

T Trust ( Do you have trust in the firm to

provide the advice and service you require)

Educate consumers to ACT when seeking advice, there is a real chance that understanding and engagement on these topics will reduce consumer detriment.

Formalise this process with my P5 document (attached) or similar, that should be a regulatory requirement at all initial new client meetings and consumers can have payment choice for services as existing and will be as close as we will ever get to eliminating remuneration or charge abuse, evaluating the professional status of the firm and a true method of comparison for the consumer.

The term Commission for the sale of investment products should be removed and replaced with client agreed ASC (Advice and continued Service Charge). This can be fees , product charges, one off and regular recurring.

Efficient, engaging, low cost with measurable results and is likely to be European proof.

Why the RDR has the capacity to be a cataclysmic disaster.

1 Fundamentally, it fails to recognise the seismic shift in economic

consequence following the so-called global credit crunch since its conception in 2006 which reflected a significantly different economic climate. Government departments, Local authorities, large and small businesses alike are currently in the process of reducing cost while maintaining current levels of service and economic activity. Only the FSA alone feels it appropriate to add £1.7 billion worth of cost to an industry on what is no more than an experiment that has the capacity to threaten viability.

The industry is grappling with continuous change such as the EU directive under solvency 2 and most recently the impact in respect of EU Gender Directive, which ironically could deliver greater “constructive” consumer detriment than any that the RDR seeks to solve.

2 When eventually the consumer understands the implications through

sensationalised media coverage in late 2012 ( ie, Example News Headlines: Be prepared to pay up to £450 an hour for financial advice in the New Year……….) it is likely to translate into a 40% drop in consumer activity as fear of cost becomes the justification for not addressing personal financial issues. This possible outcome should not be ignored. The general public are hugely influenced by media reporting irrespective of its accuracy. The best example we have of this is the issues surrounding the MMR vaccination. When the media reported a possible side effect, albeit from a spurious source, it took eight years before confidence and clear understanding to be regained.

3 The FSA sees commission at a far to simplistic level. Commission is a

legacy of direct sales. Modern financial advice is “point of entry intensive” and shoulders the regulatory costs, together with market research, knowledge administration and operational overhead. The cost reality is often far greater than the clients perception. It should have been renamed in 1994 when hard disclosure was introduced to something along the lines of “ASC” - Advice and Service Charge. See ACT above.

4 Greater professionalism is prerequisite that nobody would argue. New entrant levlel 4 is perfectly sensible. The FSA's approach to the subject of qualification is typically FSA. The weakness in the current system is the lack of structure and verification of individual continued professional development (CPD) which should be implemented and administered by the respective professional bodies. At present it is left to individual advisers integrity, ironicaly which may be the same individuals that concern the FSA with consumer detriment. There are no proposals for change to this? CPD should be reactive when significant changes occur in legislation, taxation and legal subject matter. The current push for level 4 simply represents many people spend the hours gaining no new knowledge, simply providing a profit windfall for the education institutes. Both the time and money could and should be spent on individuals pursuing the appropriate qualifications for the particular business area of advice that they specialise in. It is the pursuit of individual greater qualification that can demonstrate genuine commercial differentials for firms and should be voluntary for all existing authorised investment advisers. I believe the industry would see a formalised CPD as money well spent and reassurance for the consumer that advisers are continuously up-to-date.

Formalised CPD that could directly report to the FSA register, would be a huge confidence builder for consumers which I believe was the FSA objective and offers low cost electronic policing for the FSA. This could be achieved at a fraction of the cost of the money being wasted in pursuit of level 4.

This would create an environment where grandfathering would not be required as CPD maintains initially the status quo and moves forward all advisers from new entrants to those with many years service at the predetermined knowledge level.

In principle I believe this is how every other profession works. Those individuals who see personal and commercial advantage in higher or specialist qualifications can focus on the individual requirements. It is natural competition and competitive advantage that will drive up qualifications providing that the economic environment justifies the additional time and investment. Crucially, therefore it is the economic environment and the viability of the industry that best serves the interest of the consumer.

I feel better now having got that off my chest.

In 2005 Prime Minister Tony Blair, who’s Government created the FSA, commented in a speech to the Institute of Public Policy,

“Something is seriously awry when the FSA that was established to provide clear guidelines and rules in the Financial Services sector and to protect the consumer against the fraudulent, they now seem to be hugely inhibiting of efficient business by perfectly respectable companies that have never defrauded anyone”

Which conveniently leads me to one final question:-

Does Parliament have the power to stop this process?

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Chartered Mark

Sep 10, 2013 at 12:10

putting two and two together, I am guessing that Wheatley could see the disaster that RDR was going to be. Think about it. The Conservatives won the 2010 election, saying the FSA was a busted flush, and would be binned asap. Yet Wheatley delayed the takeover by the FCA until after the RDR was introduced. (Never can 1st April have been a more accurate date for it's launch!!)

That gives Wheatley and the FCA the clear ground between the RDR and their arrival, that will allow them to state, "Not us Gov. Not on our watch. It wer them FSA lot wot dun it."

A knighthood guaranteed for "cleaning up" (making things even worse) the mess with "RDR2 : This Time it's Personal!"

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delboy10

Sep 10, 2013 at 12:13

Wheatley (pictured) said that the RDR has been a success in terms of introducing better transparency and the removal of product bias

REALLY WHAT BLOOMIMG EVIDENCE> where does this come from, it just is not true or based on anything factually proven at this stage. It is simply because they say it has. Balderdash

He questioned whether the bank’s had offered proper advice prior to the RDR and said FCA understood that the mass market could not afford to pay for full advice

THEY COULD BEFORE THE FSA MESSED UP THE INDUSTRY.

Thankfully the banks have pulled out but we as independents who used to happily advise on smaller portfolios can no longer really afford to do so.

Presumably the next step will be to invite the banks back into the market to sell low quality non advised products to the masses with unqualified sales people. Oh what a surprise!!!!

I DON'T BELIEVE IT.

As far as Sants wanting to call off the RDR, my recollection was that the TSC called him in and told him that they wanted him to slow it down and he basically told them to get lost as it was not going to change.

Shortly after that he was on gardening leave on the way to his Knighthood and his new multi million job at the Bank.

Talk about a stitch up, and then to cap it all Hoban gets fired, rightly, leaving Tyrie and Garnier to clear up the mess.

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Phil Sipocz

Sep 10, 2013 at 12:15

Why is everyone worried about the advice gap?

Most of banks customers didn't realise they needed financial advice, it was only their trusted "cashier" that guided them that way. Therefore nothing has changed, these same customers still do not realise that they need financial advice and this time there is no one to flog them a rubbish product with a few half truths and a sales process that can be fiddled to make it look compliant.

If your service and proposition is good enough then people will pay for it, if it isn't, they won't.

Do you really want customers who see the cost of everything and the value of nothing or do you want clients that understand and value what you offer and do for them? I know which clients I have and want and strive for and it isn't Mr & Mrs Thickwit who want to pick my brain and then do what their mate says down the pub.

It's like retailing. They can buy online cheaper, or they can come into a local shop and receive a quality personal customer service. They can touch and feel what it is they are buying. It might not be as cheap but the experience is so much more satisfying and if you do it right they will come back time and time again. They are willing to pay a bit more for a better experience, guidance and re-assurance.

I recently had an enquiry from someone who said that she didn't want to sign my Terms of Business as she didn't require any advice. All she wanted was for me to tell her where to "put" her money. I advised that the footer at the bottom of my letterhead paper said Limited Company and not Registered Charity.

Believe me you do not want these type of people as clients, they will only be trouble in the long run. Just stick to the people that appreciate and understand what you do. The advice gap is not your problem.

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Punters pal

Sep 10, 2013 at 12:20

Mmmmmm.......... Full advice is 5-6 hours work. Are you sure about that one Martin? Who did you ask? I would suggest full advice and implementation of a client's requirements is an awful lot more than that. Add in regulatory and business costs, and allowing for a risk premium and maybe a bit of profit adds even more. If it were only 5-6 hours work those with a good bit less than £50k could be catered for. The whole thing is a dogs dinner. Kick the can down the road and let the next crew deal with it.

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Philip Wise

Sep 10, 2013 at 12:30

I think some of you are confused. In political elite-speak, "a concern" means "something I couldnt care less about". His speech just needs to be translated into prole-speak.

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Chartered Mark

Sep 10, 2013 at 12:31

@ Richard Arnold

A brilliant, if not concise, summation of the situation we are in.

Just a couple of points.

You failed to include Sants's "..Over Arching....." response to most questions asked, which allowed him to avoid giving any real details, that they either did not have or did not want in the public domain.

Also that Nicol received a rebuke for giggling over something, probably a suggestion that the FSA could be stopped.

And your final question, about the power of Parliament to stop or reverse the RDR. I remember clearly that Tyrie rebuked Sants for suggesting that the FSA was going ahead with the RDR and it could not be stopped. There was a quick about face from Sants agreeing that Parliament could stop the RDR (perhaps he saw a loss of his Knighthood for messing with "the man".) but basically said the Govt would be stupid to do so at this late stage.

Whatever the repercussions of the Wheatley comment, any actions will, as the saying goes, take years and cost millions, and there is no guarantee that they will be able to fix it. So as Sants knew all along, we are stuck with it and I guess we will be blamed for not advising the great unwashed for a few brass washers.

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Chris Miller

Sep 10, 2013 at 12:46

@ Chartered Mark

Yep we remember Tyrie rebuking sants.

However, I wonder if this was really meant.

In a letter he subsequently sent to sants it started with the following:

'MY DEAR HECTOR'

Hardly the frostiest of openings is it?.... more like a couple of old buffers meeting at the Garrick Club.

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Jonathan Kirby

Sep 10, 2013 at 12:50

The following is the summary of my TSC evidence sent 6th January 2011

Things have actually turned out slightly differently as now it is the likes of SJP who are doing the churning rather than the banks, but I don't think I was far off the mark.

Summary

i. The proposals for RDR, which I am sure were entered into through a spirit of improving matters will have the opposite effect. Hopefully someone in the FSA has enough about them to admit they have got this wrong and apply common sense before it is too late. Otherwise, many of the best and most experienced advisers will retire early unless the FSA will allow true Grandfathering. What they are being asked to do just to continue trading a few months or years is both unrealistic and unreasonable.

ii. Some put the estimate of the number of people who will no longer be able to obtain advice from their trusted adviser at over a million. Whatever the actual number, at a time of such financial uncertainty, any reduction in available advice is potentially catastrophic for those individuals who are deprived.

iii. Without a large and active IFA market keeping competition alive, costs and charges are more likely to go up, not down.

iv. The very organisations that have the worst track records in bad advice will be those set to exploit the new regime. We have never had a substantiated claim for bad advice against us.

v. Mis-selling and ‘churning’ is likely to increase massively as the banks and insurance companies, who will not be able to advise ex- IFA clients on their existing products, encourage them to cash in perfectly good and suitable products to be reinvested in their own product ranges, earning substantial amounts at the expense of their customers in the process.

vi. Although nothing to do with the stated aims and objectives, RDR, the effects of a reductions in IFA’s will also have further ramifications as support and compliance staff numbers will also have to reduce as will the number of people employed by those companies who rely on the IFA market to sell their products.

vii. Increased unemployment, coupled with a decrease in tax revenues is exactly the scenario which the country needs to avoid, yet this is where the un-elected FSA are leading us.

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Dynamike

Sep 10, 2013 at 12:51

...so, you've messed up and left a large gap in the advice market but your remedy is to hope that someone will fill it with an innovative web-based solution!! What a relief to see that UK financial services is in really safe hands.

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John Frink

Sep 10, 2013 at 12:53

'Advice gap?' If you have under £100,000 you don't need investment advice - Hargreaves Lansdown can provide you with an ISA and some vanilla unit trusts and that is you sorted. Perhaps you need insurance? Moneysupermarket can have that sorted for you in no time.

Financial advice is only required for people with money...

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thomas west

Sep 10, 2013 at 13:00

5-6 hours? I can remember working for RBS/NatWest when we were expected to see 12-14 clients in a week and all in 37.5hrs! These people just do not live in the real world; oh and by the way, the FSA conducted three reviews to indentify product bias post the Gleneagles meeting in 2006. They found that 95% of cases were sold correctly but still went ahead!

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Tony_Laverick

Sep 10, 2013 at 13:19

So what evidence is there that cost-effective advice propositions to the lower-end of the market are in transition? Honestly always, please.

The PPI scandal confirms the banks were not to be trusted so the closure of their "advice" arms must be good news. The regulator can take some credit for the Banks' withdrawal from the market but what a pity this outcome was not intentional.

The true advice gap is because advisers are better qualified and few of the trustworthy low claims variety can now afford to charge competitive fees for clients with under £50,000 invested or to invest due to regulatory overkill. Not sure that this applies to the £100,000 figure Martin quotes but it will if over-compliance continues.

Time to simplify Martin, not hang yourself in complicated red tape.

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Glen McKeown

Sep 10, 2013 at 13:21

I like the final part of Julian Stevens submission, add clarity and you have all the requirements for decent quality advice.

And that should be the requirement for Regulation too.

There is an interesting article by Robert Peston on the BBC site today in which he comments on the banking regulation, and the fact that they are getting so complex they are becoming more difficult to enforce. Plus ca change.

The real gap in advice is the one between the ears of the Regulators. I doubt it will ever be filled.

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Darren Lloyd Thomas

Sep 10, 2013 at 13:38

The thing that terrifies me the most here is the regulators statement (as quoted) that they believe full advice takes around 5-6 hours. If they are genuinely thinking this or seeing this evidenced - we are a doomed breed because you can see the disconnect then between what they perceive we earn and what we actually earn.

A financial planning exercise including client meetings and travelling will be somewhere exactly double this figure at 10-12 hours.

Help!

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Sam Caunt

Sep 10, 2013 at 13:44

The aim of the RDR was to get more people engaging with financial services and remove the barriers to entry. We tend to forget this. There were meant to be several ways of getting folks involved - remember focused advice? Full advice was only intended for the affluent and was always a minor solution to the problem.

Professionalism and the removal of product bias which is deemed a success is also a very small part of the problem - basically we still haven't got a method of delivering low cost solutions to the mass affluent (who never engaged with us anyway) and a solution still seems miles away.

The RDR is a long way off meeting its original aims.

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You must be joking

Sep 10, 2013 at 14:00

I have a serious question for everyone who has posted here claiming that they can't service clients below a certain asset value post RDR:

if you were willing to take clients on pre-RDR below the figure you now quote as a minimum, what has changed, why can't you make your fee structure work at these levels?

I'm intrigued!

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Jonathan Kirby

Sep 10, 2013 at 14:17

@ YMBJ

Because now we have to do as much work for a simple fund switch as for a whole new portfolio before.

The whole thing is madness.

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Belmarsh Solitary

Sep 10, 2013 at 14:17

IFAs arrange legal contracts between two ill-matched parties, the financial institution, which devises the contract, and the client - the 'little man'. Both parties benefit from the IFA - the client because he is assured he is 'doing the right thing', and the financial institution, because a suitable client is a satisfied client. Should the IFA be paid? Of course. But what's this? A fourth party intrudes, the Regulator, laying down the law about how the IFA can be remunerated, making him appear unaffordable. So the IFA retires.

Now the little man falls into all those areas of contention on which the IFA would have advised: he can't have his money out, there's a penalty, an MVR, he's broken the ISA or pension regulations, there's no trust document, he's invested in cash for 25 years, no-one re-balanced his investments, the investment house can't help him, they are execution only, not responsible mate!

That's the advice gap. And the damage will last for fifty and more years.

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Barman

Sep 10, 2013 at 14:27

@Belmarsh - So by your example the advice gap exisits for ex advised consumers who have been ill advised to invest in with profits or cash?

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Dan Rear

Sep 10, 2013 at 14:29

JK, is that a result of the RDR? Or a more intrusive, or perceived to be more intrusive, Compliance Regime that might have occurred without RDR? I may be splitting hairs, and am no fan of the changes that RDR continues to imply, but I just wonder.

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Julian Stevens

Sep 10, 2013 at 14:30

Remember the question asked of Hector Sants by the TSC when he appeared before it in March 2011. Does the FSA have a pernicious agenda against small IFA's? In decidedly tepid tones, Sants said No.

Yet look where we are now. The small IFA (and a good few nationals) are clearly becoming endangered species. And the networks (those that remain) are haemmorhaging members ~ 25% quit Sesame in the past 12m, 8% quit Financial, figures for Tenet as yet unpublished.......

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You must be joking

Sep 10, 2013 at 14:32

@ JK

The FSA/FCA have said that in delivering RDR?

WHERE EXACTLY?

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Jonathan Kirby

Sep 10, 2013 at 14:45

@ YMBJ & Dan Rear

I would concede that this may not be a direct result of RDR but since Sesame's massive fine everyone is running scared and covering their own backsides.

What it does mean is that it makes it much harder to truly service clients in the way we used to.

Coincidentally, I had our Fundsnetwork Client holdings list open and had a look at the numbers.

One holding over £200k

the next 13 between £100k and £200k

25 between £50k and £100k

117 at less than £50k

To give proper service to anyone in the last two groups is a struggle on 0.5% as if we make any recommendations there are hours of work.

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Dan Rear

Sep 10, 2013 at 14:57

Point taken, JK, my client bank is similar to yours at a glance, though I've never used FFN. Depends what your overheads are I guess, but I remain quite happy dealing with smaller Portfolios. For now....

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SJ

Sep 10, 2013 at 14:59

@ Richard Arnold:

Did you get a reply to your comprehensive feedback to the Treasury Select Committee on the Sants/Nicholls interview?

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David West

Sep 10, 2013 at 15:07

I think the FCA should view banks getting out as a positive since their advice was never worth having. It may be the only good thing to come out of the RDR shambles. The FSA/FCA have made a hugh 'balls up' but hell will freeze over before they admit it. Someone capable needs to be put in charge of the FCA - for my money I would sugguest Alistair Darling. He's surely wasted at the moment in the Labour Circus - sorry, Party.

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You must be joking

Sep 10, 2013 at 15:10

@ JK

Ah, that explains a lot.

Networks, all running scared as they have to cater for their absolute worst member when designing their compliance monitoring!

You appear to have two choices regarding the final two groups:

1. Work smarter (don't take that the wrong way)

2. Charge more

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Julian Stevens

Sep 10, 2013 at 15:19

What JK's post tells us is that, because of excessively prescriptive and heavy-handed regulation, it's become almost impossible to service even existing clients with any but the largest portfolios unless, of course, the clients are prepared to pay disproportionately large fees for it. Is this what the RDR was intended to achieve?

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Richard Arnold

Sep 10, 2013 at 15:28

@SJ

No reply.

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James Hurdman

Sep 10, 2013 at 15:34

As others have already said, the most worrying statement in this article is that he believes that full advice takes only 5-6 hours. This is so far from reality. It does provide insight into the regulators' (lack of) understanding though.

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Barman

Sep 10, 2013 at 15:43

@ JK you can cross subsidise the service costs accross your client bank to provide an even service to your clients - that may help with the smaller pot guys.

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Philip Melville

Sep 10, 2013 at 16:15

Ah well, - all the usual rubbish trying to excuse an inability to adapt to a different world.

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Jonathan Kirby

Sep 10, 2013 at 16:31

& what your post tells us Philip M is that you have no care about your clients, only yourself.

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Philip Melville

Sep 10, 2013 at 16:44

Not sure how you managed that from my sentence but it does continue to say volumes about you.

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Jonathan Kirby

Sep 10, 2013 at 16:59

Thanks for the compliment, as my clients know, I always put their needs first.

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You must be joking

Sep 10, 2013 at 17:01

@ Philip M

Your comments would carry far more weight if you hadn't decided to 'get out' before RDR was implemented...

I'd hardly consider this as 'an ability to adapt to a different world' more 'avoiding a different world'

:-)

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Roydo

Sep 10, 2013 at 17:52

I dont think Phil has "got out" YMBJ. Might be wrong, but pretty sure he is still going strong

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Philip Melville

Sep 10, 2013 at 18:32

Yes I am still here and busier than ever but as there are now just the two of us we have adapted to make our lives more manageable.

Still making lots of money and enjoying the business more than ever but I guess most of you will not want to hear from that point of view.

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You must be joking

Sep 10, 2013 at 19:31

@ Roydo

I'd consider cancelling CF30 and RfIM 3 weeks before RDR came in as "getting out", but that's just my opinion of course.

@ Philip M

Glad Argyle is busy and profitable, and despite my comment above, I agree that RDR isn't the challenge that many people seem to consider it is - hence my earlier question at 1400hrs.

:-)

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Ian Lees

Sep 10, 2013 at 19:46

How can there be " an Advice Gap " with so much advice on offer ? It is just that no one understands ( except Independent Financial Advisers ) . . .that the customer comes first every time. . .and the adviser earns his or her money through Great Advice good service - and the results for customers. Perhaps with the Brain Drain in IFA's - the FCA and advice appears to have gone doon the " Shanks " and the FCA and Independent Advice . . .is Dooomed ! ye hear Dooomed ! This is now going to place greater emphasis on the MAS. We recomend everyone goes to the MAS . With adviser numbers reducing - and the quality of advice disappearing fast . . . and the numbers of administrators increasing ( with less money ) the business model seems to be ill conceived damaged beyond repair . . .and the peoples savings going down the "cludgy" of life. I have a " soft spot " for Edinburgh's incompetent and insolvent Banks . . . . it is a swamp just outside Musselburgh !

Perhaps the FCA could introduce an insurance product ? A "warranty" in case the advice provided was poor . . . . . or like in the first and second world wars . . .a kind of War Loan . . . a security . . .backed by the government ( if they had any money ) . . .but they have been shown to be of little worth as inflation eroded them ? I feel a song coming on . . Four wheel son my wagon and I am just rolling along . . .The FCA has destroyed me, . . . but i'm singing my ha happy song ! Three wheels on my . . . .

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GKP

Sep 10, 2013 at 20:09

@PM Delighted you are doing well but I don't think this forum is the right place for self-aggrandisement - it makes you sound rather smug. I wish you well nonetheless.

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SJ

Sep 10, 2013 at 20:24

@ Richard Arnold.

No reply? That's appalling when it's quite obvious that you care passionately about the subject and had taken a great deal of time and effort in composing your feedback.

At the very least you should have received a thank you note saying that your comments had been read/passed on/whatever.

The TSC aren't much use, are they? They don't even possess common courtesy.

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Philip Melville

Sep 10, 2013 at 21:29

GKP

Not intentional ( although I am a bit smug sometimes ) rather a veiled attempt to counter the interminable whinging etc. that the same old whatsits pour all over these blogs.

Best wishes.

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Julian Stevens

Sep 11, 2013 at 09:50

The reason for the advice gap (IMHO) is the absolute tsunami of regulatory requirements to justify and to document the suitability of virtually every and any recommendation. The costs of endlessly increasing regulation can only be to make advice less, not more accessible. Full compliance (now a virtual impossibility for those still clinging desperately to independent WoM status) may, for those able and willing to pay for it, result in "perfect" advice. But, if the result is that more and more ordinary people can't afford it and are thus disenfranchised, how can the RDR possibly be described as anything but a failure? What exactly has been achieved?

For advice to be more accessible to the great majority of Middle England (and Wales and Scotland), the advice and compliance processes need to be streamlined and simplified. not made ever more complicated and expensive. Can't the FSA see this? Maybe it does but remains in stubborn denial of the fact. If not to make life UTTERLY IMPOSSIBLE for financial services intermediaries and to deter Middle England from seeking financial advice, just what is the real agenda here?

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David West

Sep 11, 2013 at 10:34

@ Julian Stevens

Couldn't agree with you more. Now they are looking at cash savings accounts. Their next 'balls up' presumably.

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GKP

Sep 11, 2013 at 10:35

@ PM

I hear you!

@ Julian Stevens

I couldn't agree more Julian. Those of us who been charging fees for decades to relatively high net worth clients have never had anything to fear from RDR. However, the purpose of RDR was not to further protect my wealthy clients, most of whom are extremely savvy and not prone to paying fees (or charges of any kind) where they see no value but to make transparently charged financial advice available to the wider population. This it has signally failed to do. As you say, it has succeeded in achieving the precise opposite, for the reasons you describe. Thus it can only be judged a failure on the evidence available so far. Any attempt by the regulator to argue otherwise only serves to further damage its already fragile credibility.

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Glen McKeown

Sep 11, 2013 at 10:39

When I started the client had basically 3 options - protection, cash or With Profits, and it was often said that even bad advice was better than no advice. The last statement no longer holds (if it ever did) because of the proliferation of highly complex products that even the producers do not fully understand. The FCA are totally out of their depth with both products and human relations, which is why they compensate by hiding behind closed doors producing reams of self contradictory regulations.

So Comrades when does the Revolution begin? Do we start with the Investment Managers or the FCA? Back to Managed Funds ( WP is just too old hat), cash & protection, and burn Canary Wharf.

Would the vast majority of clients be any worse off under such a regime? And wouldn't life be a lot simpler for you?

Action This Day!!

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Dan Rear

Sep 11, 2013 at 10:43

Glenn, agree with all that, and Pru W/P ain't too bad is it?? Easier for Clients, and maybe us too - in that order.

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Dynamike

Sep 11, 2013 at 10:47

@GKP

You're conclusion that RDR is a failure and your reasons why are absolutely correct.

Will the FCA ever admit this?

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Chris Miller

Sep 11, 2013 at 10:54

@GKP

Well put, but are you being too generous to the FCA when you say it has 'fragile credibility'.

Might I suggest that the there is a complete lack of credibility as far as this intellectually bankrupt institution is concerned.

'By their deeds shall ye judge them'.

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Alan Lakey

Sep 11, 2013 at 11:57

being a regular whinger I find it frightfully apposite that Philip Melville, who it appears couldn't give a cats arse about any other advisers or consumers other than his own clients, should prove himself hypocritical by also bouncing back with his own frothy submissions.

If Wheatley really believes that web-based solutions (which I read primarily as aggregators and bucket shops) are the solution to the woeful failure to invest, save and protect then he is even less in touch than Sants and the PWC/KPMG brigade of ship-jumpers.

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Barman

Sep 11, 2013 at 12:10

@ Alan, Wheatley doesnt say that, theres no quotation to that regard. It appears to be something that Citywire have assumed he believes.

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Bob Donaldson

Sep 11, 2013 at 16:53

@Phillip Melville - It is very easy to cut back on the work you do and earn a good living. However, some of us owe a degree of loyalty to our clients and no matter whether big or small, rich or poor, fat or thjin, white or black, they all deserve the same service. The problem is that it now costs so much more to deal with those clients.

Note a 51 page brochure on a structered investment plan a 45 page KID on a few OEICs/Unit Trusts etc. An hours fact find etc need I go on.

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Philip Melville

Sep 11, 2013 at 17:43

Hello Bobby,

I see your tea leaves tell you what I do every day then.

If you got off your fat .... And learned to live in today's financial world instead of constantly wishing it was yesterday you might learn some new and better ways to serve clients.

Giving someone a meaningless heap of paper to satisfy a compliance need does not mean you are looking after the interests of your client ! It just means that you are trying to protect yourself by covering your fat .... With waste paper.

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Ian Lees

Sep 11, 2013 at 19:02

@ Alan Lakey . . Philip Melville does not need me stand up for him or his business model - nor would he want me to probably. However, there are many business models - which work for many different types and the people they serve. One thing which I believe you cannot accuse Philip Melville of is his commitment - and his workload - and the way he looks after his clients - he does operate in his own way with his own clients - which works for both. The old systems - whereby product providers lavished gifts high levels of commissions lunches and other additional benefits. Scottish Widows used to take their adviser / broker to France for a day - to BUY business in this way does not work. The work Independent Financial Advisers do - in their own way - the commitment - the Trust they develop with their clients - under the SIEGE AND FURY of the FCA - who are unable to understand and DO NOT WISH TO LISTEN - to consumers - preferring the lobbyists of insurance companies and large accountancy firms - may be more to do with them feathering their OWN NESTS ( and that is not the poor mans pension - it is the Executive Pensions schemes - the Gold Plated Pensions - of their exotic jobs - and underperforming work ethic. Keep up your good work - keep providing your clients with great service - and share the opportunities - during this RECESSION - Some one once said " He who Dares Wins ", That Del boy made a slogan for one of the Worlds best forces - forces for good - fighting evil . . . . . . or as we call them . . . . .

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Philip Melville

Sep 11, 2013 at 21:08

Hello Alan,

I suppose my whinging about you whinging is still whinging so you have a point.

What is really amusing with you and yours is the way you seem to think you know anything about me .You can of course see how we work from our website which is not something that can be said for any of you.

Other than your unremitting cries to have commission restored and your almost total reliance on whatever products the providers will facilitate your remuneration, it is hard to know anything about any of you.

Most of your issues would disappear in a heartbeat if you got your income from your clients . The regulator would not be able to tell your clients what they could or could not do with their own money.

But no you still want to be in bed with product providers be it for trail or for the new commission system you call adviser charging.

It is now nine months into the brave new world but you still crave your hit of commission.

Millions need and want good financial advice and they will pay for that advice if they think it will add value to their lives.

Put your brains to work and get off your backsides and get on with showing people why it is worth having you involved in their financial arrangements.

It is much more fun than trying to stop the tide coming in every day.

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Phil Castle

Sep 11, 2013 at 22:36

I don't want to see commission restored. Whilst I was critical of RDR the issues I was critical off the FCA are now realising ARE the problem some off us warned them of including Alan Lackey I.e whilst lump sums work fine on fees, there needs to be some form of factoring form regular savings.

@Phil M . Alan I believe has chosen to become restricted, you have chosen to dereguster to advise at all and I have chosen to remain Independant. that simply reflects the business cycle and client base we have. It does not make any of us wrong per se.

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Alan Lakey

Sep 12, 2013 at 07:54

@ Ian Lees - I was not commenting on PMs commitment to his clients. Of this I have no knowledge and I am sure he does a good job and his clients love him and his quirky ways.

My beef is that he and others seem to believe that there is one way only and, guess what, it is the one that they are pursuing.

@ P Melville - Actually my business is up on last year which might be testament to how I look after my clients or, perhaps, mere luck.

@ Phil Castle - I and others warned that the brave new world of RDR - a regulators wet dream - would destabilise the industry, disenfranchise millions of consumers, rid the industry of thousands of experienced advisers and result in higher regulatory fees, per se.

So far we are being proved right.

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Phil castle via mobile

Sep 12, 2013 at 08:32

@Alan - I agree you/I am being proven right as far as the warnings if unintended consequences and the need for solutions BEFORE RDR implementation. A delayed implementation in stages rather than a fixed date cliff edge would have been a good idea and was what I advocated as did the TSC.

Banning commission on investments wash,t necessary, there were other cheaper solutions, but the stupid thing was banning with no factoring arranged for regular savings.

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Ian Lees

Sep 12, 2013 at 08:42

@ Alan Lakey .. I apologise if I misinterpreted your words - but that is the impression given and my understanding. However, you will see under the Scottish led " Reformation " of " Distribution of Retail insurance services (RDR ) - their is now more variety than ever for " financial advisers e.g Tied Agents ( Standard Life Aviva etc.,) Multi Tied Agents ( St James Place), Restricted Advisers ( Tenet Services owned by Standard Life Aviva etc., ), Nearly/Almost . . . Independent Financial Advisers - ( then the Full Monty ) Whole of Market Independent Financial Advisers.

On top of this there are neighbours , fathers and daughters -(see previous ) the pub adviser, Citizens Advice, Which - and finally the Money Advice Service (MAS ). So the introduction of " REFORMATION ", under RDR - in financial advice ( now called " financial services" ) - once the Co Op, The Pearl Insurance company, Liverpool Victoria, The Friendly Societies and The Prudential have been forced out - to make way - and a market for Edinburgh's insolvent insurance companies and Banks - and their tardy sales forces and procedures . . . . . . means more good quality business for those who attain " level Four Qualification ", and academic exam - which does not provide for any reasonable requirements of skill, or knowledge or experience . . .only the ability to pass the Chartered Insurance Industry - exam. By removing Advisers and shoe horning them into the gulley of Tied Agent or restricted adviser - the Government has reduced the opportunities for entrepreneurs like you, or businesses . . to operate. These people are forced into the Labour camps of Restricted Advisers and Tied Agents - by insolvent insurance companies who have demonstrated they do not know how to run a direct sales force ( on many attempts) - the only exceptions are St James Place and Zurich ( ex Hambro Life and Allied Dunbar ). The reason is the quality of management - and their understanding of people. The only effort which has been successful for these large incompetent insurance companies - is - Their Ability to Buy and Churn Business . . .I refer to this as " Churn and Burn ". The FCA could be better informed if they received the accurate figures of insurance companies - and advisers - by looking at their " Transfer Records ". A record is held by each Wrap Account of new business e.g. Standard Life. Standard Life could identify where the business has come form ( and in the great quantities - as they Claim.

I Would like to see more people saving and investing - which was the result of the Direct Sales - and the wrong uns - chucked out. The control of the direct sales person is crucial ( for confidence and trust - and Hambro Life made many a return financial and/or compensation or Death Claims to their customers. Why ? Because it is Good Business Practice . The consequences are there were less claims - than now . . in an apparently largely uncontrolled industry.

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GKP

Sep 12, 2013 at 08:47

I struggle to understand why the 'purists' are so opposed to facilitated Adviser Charging.

@PM says get the clients to pay with their own money - but that is what facilitated Adviser Charging is! Whether the client chooses to write me a cheque from his bank account or to say, ask his Wrap provider to pay me the fees due is surely his choice. Either way it still is his money. The product provider has no say or influence in how much the Adviser Charge is, they just pay what the client has instructed.

In my view, it is not the regulator's business which pot of money the client chooses to pay his Adviser Charges from. They are disclosed in cash terms after all. I haven't even mentioned possible tax efficiencies for the client - oh, I just have.

I would genuinely like to know why some feel facilitated Adviser Charging, of the manner described above is so abhorrent.

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Alan Lakey

Sep 12, 2013 at 08:51

Until 1st January we had greater choice. Advisers could agree fees and could agree commission.

There was also far greater choice inasmuch as there was 20% more advisers for consumers to access.

Consumer choice should be the mantra - not regulator imposed constraints because they think they know best.

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Ian Lees

Sep 12, 2013 at 09:53

The REFORMATION of Distribution is ALL about " control " by Edinburgh's Stalanist Freak Control merchants e.g Mike DRoss one time ceo of the sloppy widders. These arrogant people who have failed to run these insurance company in a solvent manner - have abused their positions ( Solvent Abuse ? ). The incompetents are offered posiions in companies for whom they have no respect - or desire to provide proper products or services. They rely on Churning to save their miserable hides - and introduce new ideas for tax IE Pensions under Nest or Auto Enrolment - because they cannot think of ANY OTHER WAY . . to engage with the clients THEY RIPPED OFF in . . . . endowments pensions PPI etc., Blaming the Brokers to whom . . .they offered agencies - to OFF LOAD THE BLAME for their Reckless Engineered Groomed and Racketeering . . . . . against consumers . . .means the TRUST upon which insurance products rely - has GONE ! Now ! so have the advisers . . . . leaving the tarnished industry of insurance without the sales people they so openly abused. Having destroyed their administrators - and outsourced admin - to the call centres and others .. .their service standards have reduced further . . .and the Directors have not yet noticed this. As a result that No One Trusts and Insurance company - the Government - David Cameron and Steve Webb - have resorted to the Auto Enrolment Pensions - a further TAX as much on Employers . . . as it sis a TAX on employees. Once in the pension they lose all control of their funds - and looking at the current problems with the state pension scheme - the promises and assurances - REMOVED BY MR CAMERON . . .I would not feel safe paying my AE Tax - to " an insurance company ".

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Ian Lees

Sep 12, 2013 at 09:57

Wot the heck is " FACILITIATED ADVISER CHARGING ? " If it is commissions use the term . If it is customer agreed remuneration - use the Term. If it is a "bung" or a " backhander " from one of the insolvent insurance company's - use the Term.

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Ian Lees

Sep 12, 2013 at 09:57

Wot the heck is " FACILITIATED ADVISER CHARGING ? " If it is commissions use the term . If it is customer agreed remuneration - use the Term. If it is a "bung" or a " backhander " from one of the insolvent insurance company's - use the Term.

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Jonathan Kirby

Sep 12, 2013 at 10:11

We offer clients a choice.

At present it would appear that the preferred option is to add the charge to the investment amount, followed by paying by separate cheque, followed by deducting.

However, for anything other than an ISA, it doesn't really alter the overall amount to invest.

If someone has £50k to invest, then they don't magically have £50k plus a fee.

Most clients are totally indifferent and ask what is the easiest route. All cost the same.

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GKP

Sep 12, 2013 at 10:39

Ian,

Facilitated Adviser Charging is customer agreed remuneration but we are not allowed to call it that! You may be a little behind in your reading - talk to your compliance support.

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Ian Lees

Sep 12, 2013 at 14:34

@ GKP . . I may well be a little . . . " behind ", but these three words " Customer " and " Agreed " and "Remuneration " - are all words in the English/British Dictionary - who has removed them ? . . . David Cameron ?

Does this mean I may never use these words again ? Ever ? in any context ? We'll . . . be dooomed ! . . . .doooomed you hear ! Not only is Financeial Services being " RESTRICTED " - words are now RESTRICTED ? Tell the Pratts in the, power arrangers - I use them and I will continue t use them - and in many contexts . The reason Freedom of Speech ! .. . . if they are offended - tell them to send in the Regulatory Polis !

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GKP

Sep 12, 2013 at 14:49

Ha ha. Nice one Ian. You call it what you like!!!

I sense we are on the same side here but your drugs are obviously better than mine.

I too hate 'restricted' by the way.

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Julian Stevens

Sep 12, 2013 at 15:20

Elsewhere, it's been suggested that Martin Wheatley may be on the verge of giving the green light to a new simple advice model, though just what this might look like is completely unknown (at least to me). Given that efforts to establish a simple advice model for protection came up with nothing more than dropping Premium Protection from Term Assurance, one wonders if there's a hope in hell of MW's cohorts coming up with any sort of remotely viable simple advice model for anything else such as investments and pensions.

Well, if you're reading this, Mr Wheatley, start with the three basic questions, the answers to which are all that 95% of punters want answered:-

1. What's the proposition?

2. What's it going to cost? And

3. What are the risks?

PCR ~ Got that?

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Jonathan Kirby

Sep 12, 2013 at 15:55

Nearly 100 posts on this.

On the plus side I don't see the venom that the dear departed Hector engendered.

I may be wrong, but I do feel much more respect for his replacement.

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Julian Stevens

Sep 12, 2013 at 16:09

Martin Wheatley may have inherited from his predecessor an almighty mess, but actions speak louder than words. Does he have the courage and determination to grasp the bull by the horns and sort it out?

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Philip Melville

Sep 12, 2013 at 16:35

Why all the words whingers ?

Just click on the blog and write...

Give us back our commission !

Everything else is just waffle using up space.

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Dynamike

Sep 12, 2013 at 16:59

@PM

There are so many things wrong with RDR that you're just showing your own stupidity by stating that anybody who raises an objection is doing so because they miss commission.

If you can't take part in constructive communications you should stay off the site. Other professionals should be allowed to share their views without you coming on here just to wind everyone up. I wonder what your clients would make of the real you??

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Philip Melville

Sep 12, 2013 at 17:12

@ Dynamike,

Sorry you have no name but is it possible that you could point me to any other aspect of the RDR which has made you all so unhappy.

It has apparently stopped millions from getting advice but apart from assuming that people will not pay none of you ever mentions anything else - other than how horrid the current incumbent at the FCA is of course.

So if you have a minute I would appreciate what it is that you object to other than commission constructively of course as usual .

Client seem to have been happy - ish for the past 35 years so I am happy with that.

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Richard Arnold

Sep 12, 2013 at 17:33

@Philip Melville

Just a thought, a quote by Simon Morden.....

People like us, we think differently, don't we? We are different. We do all the things that others do. But when it comes down to it, we don't need anyone else. We're happy doing what we do and having obligation interferes with that. And sometimes I think we don't even need ourselves.

What's most important is to find out whether we're right or not.”

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Philip Melville

Sep 12, 2013 at 18:25

You will have to excuse me Richard but my supper is ready and I am not too bright at this time of the day..

Is that an answer to the question of what the RDR has actually done to cause all of this whinging ?

Or is it just another collection of words - however interesting ?

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Ian Lees

Sep 12, 2013 at 18:39

@ Richard Arnold . . .I think you will find . . . " the answer my friend is blowing in the wind . .the answer my friend is in the wind ".

Whether this is the wind . . . . of the politician or the wind . . . of the FCA ?

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delboy10

Sep 12, 2013 at 18:43

@PM

sorry, I do not usually get cross, but you MR M really are the most supercilious self satisfied kind of PRaxx that brings out the worst in us all!!

I suppose you also find something to rejoice about for the letter that has recently dropped on our doormats informing us that we must now pay for a new CC license at the whim of this bloody bunch of morons, and we can get a discount while stocks last on a new two year license because they are now voiding our existing indefinite licenses on another bloody whim of theirs. I only recently paid £80 to have the category changed!!

But of course you are too arrogant and important for that to matter.

Wake up and smell the coffee you fool.

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Ian Lees

Sep 12, 2013 at 18:59

@GKP - For the record I do not Hate " restricted ", in the same way I do not Hate "the Tied Agent ". I have a lot of respect for those who choose this route. It is my opinion that the consumers are better served with a whole of Market Financial Planner - rather than a product flogger - relying on flagellation or some other form of commissions. Good advisers have agreed the terms of business prior to their offering advice - and most consumers are willing to pay for it. Many commission orientated advisers who were, and may still be . . .look upon the opportunity of large amounts of commissions up front ( initial ) which if the client is not yet convinced - or changes their minds . . .the adviser has been paid. Secondly large amounts can be generated and blamed on the product provider on the basis " it is not coming out of their investment". Product providers changed the rules to have clawback - ( except at broker consultants at scottish widows etc., and their employees and consultants . . . . ( IE Only for BROKERS ) in an attempt to stop the easy sale or the poor advice - where some advisers . . .may have glazed over the reason behind the product ie they had not properly convinced the client - of the REAL worth of the insurance product. I have respect for those who conduct themselves with integrity - honesty - and professionalism - in whatever route they choose. The bottom line as every good adviser knows . . is . . .it is the result for the client which is the most important ... more so now than ever as consumers have no idea what their state pension is worth . . .having been conned by banks ripped of with the endowments and the pensions over zealous selling ( Mainly by treacherous and insolvent bank Directors and their employees.

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Ian Lees

Sep 12, 2013 at 19:07

Now then ! Now then ! Bell Boy . . .everyone has an opinion, and is entitled to it .. .if you cannot disclose your identity - any remarks are worthless - and your attacks those of a spineless coward. . .but that is only my opinion.

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Philip Melville

Sep 12, 2013 at 19:19

So Dell Boy,

£80 has disenfranchised the population from your advice then ?

Law of unintended consequences.

I think if giving you £80 will fix things for the population then I will happily do that so lets have your ADDRESS AND NAME so I can send the cheque..

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GKP

Sep 12, 2013 at 19:51

@Ian Lees

For the record, I meant that I hate the TERM restricted. I am actually thinking of becoming restricted myself.

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Ian Lees

Sep 12, 2013 at 21:36

@GKP . . I assumed you were restricted . . . ? I prefer the term Tied Agent which offers a clear and concise description of having a Principal - and offering the services of that principal. Restricted could mean only selling insurance protection policies - or restricted to selling cash ISA ? and it is such a demeaning term.

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Ian Lees

Sep 12, 2013 at 21:40

@ Philip Melville - I'll go " halfers " with you on that scenario - and many others i think will contribute to that fund . . .to assist with openness and public awareness . . .

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delboy10

Sep 13, 2013 at 10:49

As neither of you two self righteous persons are authorised since the end of last year and early this year I will take a rain check on your views and not allow your meaningless ramblings to even upset me, as I now feel sorry for you as you must be bored.

Non authorised means you are fully restricted from selling anything to anybody so RDR no longer has any impact on you anyway. No greater restriction in my view than that.

As for giving me the money for my credit license don't bother, better start a charity collection for yourselves and hope that the past sins don't catch up.

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Honest IFA

Sep 14, 2013 at 08:38

I wish some one had realised this before RDR came in and told the regulators - oh yes - they did - the entire industry!!

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Phil Castle

Sep 14, 2013 at 09:09

@Citywire, posting using your real name on this blog has shown why it is so important to some readers to be able to not inky identify the jndividualk, but also research their background, which you can't do if they post under a made up name.

I knew Phil Melville had chosen to cease to be an authorised adviser and simply relationship manage whilst Jean provides the advice as Phil had tokd me and had Ian Lees not been posting under his real name, I would not have known he'd chosen to do the same.

Whilst it is appropriate to listen to both of them, they no longer have to deal with the same issues those of us who have chosen to remain both authorized and Independent do.

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Dandy lion

Sep 14, 2013 at 09:46

The reason why we have not been inundated with bank clients wanting advice is that for the most part, they never sought advice. Someone with £50k in the bank just doesn't have the capacity for loss to become a financial advice client. You're just not going to get someone on £30k a year to pay for advice unless its something like long term care planning for parents etc.

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Ian Lees

Sep 14, 2013 at 10:05

@ bellyboy 10 - You are entirely WRONG ( with a Big R ) - being " not authorised ", is merely " Restricted Advice ",was designed by the regulator . . .to confuse the regulator . .. .as much as the general public. For example there are now Tied Agents, Multi Tied Agents Restricted Adivsers ( operating in many different areas of advice ), almost independent advisers - Independent Financial Advisers - and the Cream of the Crop Truly Independent Financial Advisers - who operate and have the facility to operate in the WHOLE OF MARKET ( with certain restrictions e.g Shares ). Then there are UCITS . . . .

However, I can understand your desire or inability to provide your name . . .and without being able to identify who you are ( we already know what you are . . ." authorised " - I cannot wait for your FCA visit in September /October 2013 ). Knoweldge and skill and customer aware ness - with due diligence . ..something they do not teach you at the PFS or CII Poly Teck . . .skool - or level four tick box exams. For the record rather than be abusive . I would suggest you do your homework first - rather than bandy about your abuse.

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Ian Lees

Sep 14, 2013 at 11:24

@ Phil Castle . . . For the record I post under my REAL NAME ! I stand by my comments - some of which may be tongue in cheek - some which are just CHEEK , and I am happy to back up my . . . .argument with FACT e.g Scottish Widows - and their incompetence as management - their failure to deal with issues - their deteriorisation . . . as a manager, their forgery of signatures on documents - as the theft of pension funds by actuarial, unsalvageable poor levels of service and their unethical dealings !

For the record I operate a Private Wealth Clients facility - which has been sold - to an authorised and working IFA in the area. I still offer tax advice and legal services advice - none of which comes under the FSA or their on going derivatives. I will be frank I have no respect for the FCA - because they do not communicate. The FCA has increased administration to such a volume ( whilst their employees - the remnants . .. and the redundancies and employees of banks . . .who know nothing about what they do . . .and who are only capable in completing Tick Box exercises . . .does not fill me with confidence. The costs of " authorisation " has increased to such an extent - that it is not profitable for me to continue. As a consequence of the AIMS AND OBJECTIVES of lobbying by the insolvent banks and insurance companies . . .the small business practices have been DRIVEN OUT OF BUSINESS. These advisers wil go on to other businesses - but what many people have NOT BEEN TOLS is how many people have BEEN THROWN OUT i.e administrators assistants financial planners . . . .REMOVED and there is no more ROOM AT THE FCA. The cost of Auto Enrolment - The Peasants Pension . . would have added to the FINANCIAL BURDEN placed on small businesses. This added TAX on peoples income - a consequence of FAILURE of the "Moron Polictician's " M P 's . . . to carry out their JOB - Having been voted in by their constituents . . . . in any adequate manner ( I have put it in Big Letters in the hope that my MP Anne Main - starts to take some notice . . . .or interest - in the constituency she has been asked to represent - AND the unemployment figures in Hertfordshire ). Young people are jobless - and top of the Employers list is Estate Agents ( NOT PLANNERS ? ) Estate Agents ? There is something fundamentally wrong in our society - when the only employer left is an estate Agent ?

The insurance industry relies on CHURNING for business . . . . the FCA is the Government strategy - to divest themselves of RESPONSIBILITY - and the shortcomings of the FimBra, PIA, FSA, and now the latest the FCA - demonstrated by the VOLUME AND SIZE OF THE FINES IMPOSED - they are not up to the JOB.

A cynical person might believe this is a strategy to pass money to each other in some form of trading or legalised fashion . . .like double house expenses claims. Let the HMRC investigate ?

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Philip Melville

Sep 14, 2013 at 11:30

@ Phil Castle.

We run a business and as in any successful business you need different skills to function effectively.

Our business faces exactly the same regulatory and economic world that you or anyone else faces in our industry.

We happen to think that our business will serve us and our clients best if we accept the realities of life in our industry as it is today and adapt accordingly.

How we choose to deal with issues is just a feature of the way we have structured our business.

Please don't include me or Jean in any catch all conclusions you may have regarding independence or anything else.

You and others including the nameless tosspots may think it a good use of time to try and turn the clock back but we do not, and our only interest in any of you is that you present a dreadful picture of an industry which we happen to enjoy and which gives us the opportunity to earn a very good living.

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Ian Lees

Sep 14, 2013 at 11:35

Sad but true Dandy Lion . The hoards of people who did not wish advice - have been forced to accept Bank advisers - forcing their way into millions of peoples savings - and they have disturbed them ( in more ways than one ) - into products which they did not necessarily want - but were forced into by Hard Nosed Sales People of the likes of LloydsTSB - now reduced to TSB . The offerings shoe horned everyone into one product or investment - without checking their attitude to risk - OR THEIR CAPACITY FOR LOSS. Given that most banks are now insolvent ( see Guardian report 13/09/2013 - where Sir ( for he retained his night hood when ordinary fred lost his ) - telephoned Alastair Darling ( Edinburgh MP ) - with his begging bowl - after his contempt for MP's - apparetly told him the Robbing Bank of Scotland was effectively bankrupt and would go out of business in TWO Hours ( not 48 hrs or a week ) - and asked him " What are YOU going to do abut it ? "

Sadly many bank clients have also been misled in this way - their savings reduced, or depleted - or destroyed by HIGH CHARGES by banks and the commissions and bonuses for their advisers, their managers their area managers and the Directors. Sadly the FCA has removed competition by reducing the numbers of high QUALITY ADVISERS - their administrators - and the advice. Put simply Independent Financial Advice is only available by the FEW for the FEW.

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delboy10

Sep 14, 2013 at 12:03

The only abuse I see is emanating from the two of you, who sit there like embittered old so and so's mouthing off how right you are over everything.

Please stop your gibberish so sensible comments can resume which they were, before your inane and silly comments began.

You are no longer dealing with the issues so don't stick your oar in. Incidentally the sheer level of spite in the comments about level four qualifications bears all the true hallmarks of someone who tried and failed, so if that is not the case don't sound like it.

I am not abusive, I will leave that to the two of you, as you sit and wallow in your own embittered misery.

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Ian Lees

Sep 14, 2013 at 13:13

@ Bell Boy aged 10 . . . I am not " old " . . nor am I " embittered " . . . I AM still engaged . . . and my OAR has never been so far in ! Furthermore I reserve the right to comment ! ?! it is the right of every UK individual - THE RIGHT OF FREE SPEACH ! of which I am exercising . . and I don't often give something for FREE. If only we knew who we were dealing with ? an internet stalker ? someone who has so little confidence he or she cannot reveal themselves . ..or defend their corner ( For I think teacher must have sent you there by now ! )

A level four qualification is of little value - and the way it is " achieved " , offers even less value. I have an O level in metalwork and Biology . . . . .

I wonder what Mr Wheately's qualification is ?

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delboy10

Sep 14, 2013 at 13:19

This was one of the first abusive comments, not from me I hasten to add!!!

"Philip Melville

Sep 12, 2013 at 16:35

.Why all the words whingers ?

Just click on the blog and write...

Give us back our commission !

Everything else is just waffle using up space. "

SO WHICH ONE OF US HAS CEASED TO DELIVER AUTHORISED ADVICE.

As you are obviously making such a major success of fee based independent advice why give up as soon as it became mandatory. Or if you are still continuing please tell us all about your unregulated activities in a regulated market.

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Phil Castle

Sep 14, 2013 at 14:02

@ Phil Melville - Are you now calling me a toss pot? Please clarify. What clock am I supposed to want turned back? Where have I said that?

I worked in exactly the same way J do now before the commission ban, so I don't need anything to change back. I do however believe there needs to be some form of factoring in place for regular savings, but that is no it my problem as I am not in thatmarket that market.

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delboy10

Sep 14, 2013 at 14:31

@Phil Castle

Phil don't try to reason with either of these two. They came on here as bored old men who have had to give up giving regulated advice, I wanted to post a copy of a statement of Professional Standing here because I don't suppose they know what it means and maybe they would like to know what one looks like.

It says:

people must be approved by the FCA before giving financial advice. You can check if this person is approved by the FCA to give advice by going to www.FCA.org.uk/register and searching with their FCA an individual reference number shown above.

The issuing body has issued this statement to the above named adviser, and has checked that the adviser meets the requirements of qualifications and standards and confirms that the adviser has signed a declaration annually stating that they have kept their knowledge up-to-date and complied with the statements of principle and code of practice for approved persons.

We all know the qualification and the standards of qualification are woefully inadequate for the job, but in order to carry on moving forward in the New World one had to qualify to do so and part of moving forward and getting on with the job was meeting that standard requirement. I trust that clients that are being dealt with by unregulated advisers are fully aware of the risks they run.

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Dandy lion

Sep 14, 2013 at 14:41

Ian, if you're not embittered I'd like to see someone who is!

Your rants are very odd and I think. You have something against Scottish Widows for some reason. I've always found them perfectly reasonable but I can guess why you and they didn't get on.

Ps being regulated in cloud cuckoo doesn't count! LOL

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Philip Melville

Sep 14, 2013 at 15:11

@Phil Castle.

Over the years I have shared much with you which was intended to be of help and you are very aware of the way in which we have structured our business to cope with the passage of time.

Whilst I have never asked for confidentiality the fact that you choose to use information given to you personally on a public blog to try and denigrate my position does put you in the Toss Pot bracket for me I am afraid.

You probably will not have bothered to note that I have never taken a personal stance in any of these blogs choosing instead to focus on the topic.

Sadly the fact that our business is conducted in a very transparent manner does give people the opportunity to comment although as you will know those commenting are usually anonymous fools.

I do not know Ian at all but I do find it very sad that he has to suffer the insults heaped upon him by trolls who do not choose or have to be named.

The aptly named Dell Boy is unfortunately typical of the trolls who inhabit these blogs and who Citywire allow to say almost anything without regard to the damage they do to the already tainted image of our industry.

You know full well Phil that our circumstances allow us to have a wry smile at those who choose to insult us but I would rather that you had not chosen to join the fools.

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Phil castle via mobile

Sep 14, 2013 at 17:14

@Phil Melville - Take a deep breath, reread what I WROTE, not what others wrote, speak to your authorised business partner and wife, Jean, ask her to read the whole series of posts and then perhaps consider making an appology for calling me a Toss pot on Monday after you have had a chance talk cool down.

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Phil Castle

Sep 14, 2013 at 17:28

@Phil Melville - calling people who use made up names iTosspots is one thing, but calling real people'"Toss pots" on a public forum for stating facts which you may not be comfortable with is another matter. Reread what I wrote, not what other people wrote, take a depp breath and then think about whether I deserve an apology. Before you reply (on Monday) ask Jean to have a read kof the thread, what you said and what I said and then decide whether to make an apology (on Monday) or not as the case may be.

Your choice, but don't,t reply before Monday please.

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Dynamike

Sep 14, 2013 at 18:27

@PM

it would be much more constructive to everyone who takes part in these constructions if you could accept that other people might have valid reasons for being unhappy with RDR and that these reasons don't just relate to the impact of the loss of commission for the adviser.

If I put my mind to it I would expect to come up with a considerable list of reasons why I'm unhappy with RDR:

- we're in a recession, adjusting to RDR has taken a big effort in from the industry itself. Lots of very good broker reps (for example) have lost their jobs - a situation I wouldn't wish on anyone.

Now, almost every week, we read of more changes the FCA seem to want to make or new interpretations of the RDR changes that the FSA refused to clarify at the time. So much of what is said seems contradictory it's difficult to run a business because to be able to plan you need certainty.

- when I attend seminars attended by other IFAs everyone seems to have jumped on this RDR bandwagon of setting and justifying fees. So many IFAs are now charging, for example, 4% initial fees and 1% trail. The whole focus seems to be about setting a fee and justifying it and the FCA seem happy with this.

But whatever happened to getting good value for clients?

When you look at where markets are and the fees people are now paying to set up an investment through some IFAs then, if a client is taking income of say 4% and using an income portfolio then, in 12 months time, they'd need the FTSE to be about 7,300 to cover the initial and ongoing charges and income.

The FCA have created a different type of monster because they're now entirely focused on justification of fees and this seems to haev given many IFAs that they can charge anything they want as long as they can get people to sign up for it.

- product providers and also profiteering from the shift. For example, we'd occasionally use Prudential's WP Bond. We would rebate 1.5% commission bad to the client (giving them around 6% in the first year) and it was a great investment from which a retired client might take 4% income. Prudential effectively subsidised the setting up of the product.

Now Pru's post RDR terms mean that even if we only take a 2% fee a client drawing 4% income is eroding their capital immediately.

The insurance company have used the commission ban to make more money for themselves and so, yes, it's more transparent but the client is worse off.

- we should be able to charge clients a fee for recommending great value products to them but the FCA don't seem interested in stopping product providers profiteering (for example the situation with Axa last week turning trail off on their bond but not giving this back to clients)

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Dandy lion

Sep 14, 2013 at 20:17

@pm

If you're charging 4pc upfront fees that's not treating clients fairly in my view. Our set up fees reflect the cost of the initial advice to us to ensure we cover our costs. We then charge 0.75pc pa of funds under management and keep the person or business happy. That's what RDR is about ie taking a long term view based on service. We've become client account managers not salesman.

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delboy10

Sep 15, 2013 at 08:21

@pm

Nice to see on your website that you are still directly authorised and regulated by the FSA do you get cheaper fees by being with them.

Call me a toss pot if you like, call me whatever names you wish to.

I am not the toss pot here.

What I am is a regulated authorised individual delivering advice legally within the legal framework.

I am neither skulking around in the background using somebody else's names in order to cut costs or because I cannot achieve full authorisation or regulation myself or doing Anything illegal or close to it.

All your talk about my next FCA visit is ridiculous I hope that the FCA will wake up to people who are operating in the shadows behind other people and who are still delivering regulated advice without the cost of all the formality of having to be fully regulated I hope they find a way of coming down hard on People who are dodging the system albeit quasi-legally.

Usually people who are operating on the fringes of something that is not really legal stay in the shadows I suggest perhaps that will be the pertinent thing to do.

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Ian Lees

Sep 15, 2013 at 09:55

@ Bell Boy . ..looks like you have dropped another " Clanger". It is not any old qualification which drives the business . . it is ethics, it is experience .. . .it is the TRUST . . . which is earned through CONSISTENCY. . . the consistency of Quality, ethical standards processes . . . due diligence and care and concern for customers . . . ..over many years !

Interestingly something the FCA are now trying to introduce - having a strategy aimed at destroyed TRUST , destroying CONSISTENCY through PIA and FSA . . . . and Pension simplification. Still it helps banks and insurance companies to CHURN CLIENTS BUSINESS !

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Ian Lees

Sep 15, 2013 at 09:58

@dandelion - playing with percentage figures are irrelevant unless you know the volume of business eg if his client has £ 40,000 then 4% represents £ 1,600

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Ian Lees

Sep 15, 2013 at 10:16

@Dandy Lion . . . I merely alert others to the lack of management at the unethical Scottish Widdows. Scottish Widows promised to take over my house in Fife . . when I moved to London Branch - then refused once I had agreed to move . . . unethical unprofessional and broken promises ! . When I refused to sign my annual appraisal and the TARGETS . . . when I refused to sign it . . . . Scottish Widows forged my signature - FRAUD - DECEIT ( by the most senior management IE Mike DRoss CEO Newton Scott SALES DIRECTOR ) to give the impression I agreed with their terms - I did not - unethical and unprofessional. When I resigned Scottish Widows made false and misleading reports in the references provided e.g claims that I was in Breach of PIA Rules with a bad debt on my personal property ( This LIE was shown and PIA Rules specifically excluded Personal Property mortgages. Interestingly Scottish Widows had a 32 % stake in my personal property ( through the Scottish Widows With Profits funds ) - and loaned me the mortgage on very special terms ( Company employee rate - for a " mutual insurance company " ) . Scottish Widows paid the mortgage on the property in London Branch since1991 . . . .. until Scottish Widows took me to the High Court in Bristol . . . where I donned my wig and defended myself - whilst the Scottish Widow engaged . . . a big form of solicitors and a Barrister> This took place between 1991 and 1997 ( I joined Scottish widows in 1986. I was relatively successful career as a barrister defending myself - against the unethical and unprofessional Scottish Widows . . . . . . I do not hold a grudge . . but Scottish Widows refuses to provide me with an agency since 1993 . . .to date. My Scottish widows clients are held through other Brokers , other IFA's - and some held direct ( eg direct sales ) . . . Why would I hold a grudge . . .I only wish to alert others ! Dandi Lion may find Scottish widows to be most agreeable . . .which probably says more about Dandi Lion ... and like the weed the head and the seeds blow off in a wind . . .

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Ian Lees

Sep 15, 2013 at 10:22

@ Delboy 10 . . .there is a massive gap between " authorised " advice eg Banks insurance company direct sales - and " Competent ADVICE ". The difference being SOUND advice , CONSISTENT advice , taking into account the requirements of the customers - before the requirements of an authorised adviser - or their professional connections eg accountants solicitors. This means - Bespoke advice - Comprehensive and in some cases Holistic advice - which generates CONSISTENCY AND TRUST - over decades.

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Ian Lees

Sep 15, 2013 at 10:39

During my last e mail I forgot to name the Solicitors they are Clarke Wilmott LLP Bristol - who were " egaged under instruction " by CEO Mike DRoss and Charles Thomson Chief Actuary and the Board of Directors at Scottish Widows, by Scottish Widows to take me to the High Court in Bristol . . .

This was the same Board of Directors who refused my practices . . .any agency with Scottish widows. I suspect his was because I was a Broker Consultant AND a Direct Salesman with Scottish Widows - which means ( like my colleagues ) I had a CLIENT BANK - and competed with all UK Insurance Brokers, Independent Financial Advisers and Accountants - and firms of solictitors ( From Dunfermline and Dalgety Bay - to London ). . . . .

What the Scottish Widows refused to accept is that clients - have the facility to choose - their adviser despite the unethical practices of Scottish Widows e.g Scottish widows Dalkeith Road alerting the advisers in LloydsTSB ( Chelmsford ) that one of my clients was selling a Scottish Widows / Clerical Medical ( now, conveniently administered by scottish widows Dalkeith Road Edinburgh ) Insurance bond. Before . . . the sale of units . . . and before the money had been sent to his bank account - the LloydsTSB bank adviser called him in " for a meeting". Fortunately, I have good relations with all my clients - we engage we talk and I was alerted to this tactic. Scottish Widows refuse to reply to my letter. The FCA was alerted , as was the serious organised Crime Agency .. . but neither organisation has made any effort to prevent these unethical business practices happening again. These are the on going failure of a regulator . . . I am NOT UPSET by these . . . activities and strategies . . .it merely demonstrates the unethical business practices of Scottish Widows and their owners LloydsTSB. It demonstrates the negligence at Board Level of LloydsTSB ( as well as at Scottish Widows Board of Directors level ) . These unethical and unprofessional business practices - have not been removed nor any processes put in place to stop them happening again . . . . . . this is a problem for those who wish to compete with Scottish widows direct sales force LloydsTSB sales force . . .and the preferences given to the IFA's .. .who find them acceptable eg Dandy Lion . . .and his / her colleagues . . .

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delboy10

Sep 15, 2013 at 11:47

@ian lees and PM

You seem to presume to know who I am the kind of business I write and the way I operate, none of which is known to you.

As an independent IFA of many years standing with many long-standing clients and many millions of funds under Influence" I find your assumptions As Highhandedly off the mark and as wrong as they are Insulting.

Both you and PM seem to have this high-handed opinion of your ability and your ethics and because others like myself don't necessarily Wish to concur with your skewed views Which seem to be framed from the perspective of the persons who have had to de-authorise for whatever reason, And you then seek to denigrate everybody else by name calling us for simply putting forward what was a fairly balanced debate going on until the two of you, with your comments o

And off the wall criticisms of everybody else as if you are coming from a place of some special merit.

Instead of all the veiled references to restructuring your business and adapting to the needs of today why don't you just tell us plainly and straightforwardly why you are no longer authorised individuals?

Oh and please this time if you reply try to do it without the insults name-calling or anything else, but if you want to call me billy Boyd deli boy whatever you like if it uses your poor little minds just carry on and do it.

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Phil Castle

Sep 15, 2013 at 12:04

@Dellboy - One of the reasons some of us get annoyed with others posts is when those posting under a made up name have an argument whilst continuing to maintain their anonymity.

I'll debate with the next person if they identify themselves and I was trying to highlight to Phil Melville that I agreed with much of what you were posting (not all), but unfortunately as a result of doing so I have now been called a toss pot too.

Are you able to post under your real name Dellboy or is there a good reason for bot doing so?

Ironically I am the only one of the posters here who could be held to account by a professional body for a breach of an ethics code for calling someone a "Tosspot" as neither Phil Melville nor Ian are regulated and hence no longer need an SPS to trade while the rest of you are posting using made up names and therefore cannot be identified.

Can everyone just calm down please.......

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SJ

Sep 15, 2013 at 12:26

@ Ian Lees & Del Boy.

I am relatively new to this profession, but I have always held the opinion that you should not openly criticise any other adviser. It is just downright unprofessional.

Every adviser is unique and they have their own way of dispensing their advice and charging for their service.

I have sat on the sidelines and I have to say that this blog reminds me more of a primary school playground spat than a professional discussion. Yes, we have the right of free speech in this country, but for the sake of everyone else can you chaps not continue your discussion in private? What has this to do with the original post - the advice gap.

What makes you think that anyone else is interested in your petty bickering?

The most valuable lesson I have learned over the last couple of days is to untick the box 'email me when someone comments on this story'

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Dandy lion

Sep 15, 2013 at 14:23

Phil

I don't use my real name because I'm afraid to raise my head over the parapet given the regulators Stasi like approach. It's actually a very sad indictment of them that some of us feel if we vented our feelings publically there might be vindictive repercussions. I prefer to contribute like this but i respect you and others for what you're doing.

I've always thought that IFAs are just a disparate group and have no real powers so they can bully us as they wish. We are easily picked off as individuals and the groups that are meant to represent us seem fairly useless to me.

I have two young advisers in my firm and they are really keen but I'd hate to be starting again now from scratch. Building a client bank from nothing like I did wil be very hard for the future adviser and inevitably the savings gap will widen I'm sad to say.

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delboy10

Sep 15, 2013 at 16:18

Sorry to everyone, but my stand in all of this was simply a reaction to two people being rude and abusive to all of us as a group.

I do however have a genuine worry/concern over individuals who are continuing to advise without authorisation, as some of their banter was virtually crowing that this was the case.

I have insulted nobody, simply asking some pertinent questions which were met with childish reposts and some fairly abusive responses.

Phil I am sorry that agreeing with me led you into the same stupidity from them, but then it really only reinforces the fact that the behaviour from those two was less than respectful , and as they no longer opt to operate in the way that the bulk of legitimate advisers do, like the rest of us, then their comments should not take any credence or demand an ear, but I was only reacting to what I thought was inappropriate in the first place.

Like dandy lion I have genuine concerns about voicing publicly and as in all of the years I have been a follower of posts on citywire I have never before seen such bad behaviour as was forthcoming from them.

Sorry to everyone for only trying to see the right thing done.

I will say no more

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Ian Lees

Sep 15, 2013 at 18:34

@S J - don't know who you are and as you refuse to embrace the new FCA Rules of openness and Transparency ( Like Dandi Lion - who refuses to " raise his head above the parapet - because of the Reprisals of the FCA ) - then the FCA HAS NOT DONE ITS JOB. Freedom of speech ! caveat emptor et all.

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Ian Lees

Sep 15, 2013 at 18:40

@ Phil Castle . . . at least you use you rreal name and stand by your comments. Likewise I have no problem highlighting issues - which I am happy to stand by. It may be repetitive . . .it may be boring . . .but this is life under the FCA, like a communist regime - these cowards are SCARED to Comment - lest they receive the VENON of the FCA . . .what kind od REGULATOR IS IT THAT CARRIES SUCH FEAR - and trepidation against Independent Financial Advisers ? ? ? ?

I suspect the fear is more to do with the insolvent insurance companies - whose lobbying exploits . . .has more to do with their . . . incompetence - their sitting on the fence because they enjoy the sensation. . the absolute control from the Cartel of insurance companies . . .. who RELY ON CHURNING and cross subsidisation of products and costs . . .to keep them afloat . . .the corruption and destruction of competition . . .

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Ian Lees

Sep 15, 2013 at 18:46

@ Belly Boy 10 . . .as you refuse to use YOUR OWN NAME . . .I feel I am able to make up any name I like for you ! Your claims to be " authorised " are irrelevant and outrageous . . .as your remarks. As you refuse to disclose your name . . . This means I ( and others ) have no respect for you ! Your claims are as ficticious as your made up name ! Dropped another clanger . . .. For whom the Bell Boy Tolls . . . It is so easy to be rude or abusive - to non entities ! ! ! ! because they do not count Yes Count )

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Dandy lion

Sep 15, 2013 at 21:18

Ian, i don't normally drop to the depths of insulting people on this forum however I can't stand by and listen to your weird wnd bullying drivel any longer.

This site is for authorised financial advisers to discuss how we go about things and industry stuff in general. You are just a rude, supercilious, bitter old man who none of us can stand anymore. So please go away and leave us to do it and take your issues up with your ex wife or Scottish widows, if they are indeed different.

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Ian Lees

Sep 16, 2013 at 08:51

@ Dandi Lion . . .Thank you for those few kind words . . . and your own comments about myself - Scottish Widows and in particular my Ex Wife. The site is for consumers as well as " the remaining authorised individuals ", for information and debate. If you like neither I suggest you find another medium. I inform . . . and if it affects your special relationship with the insolvent widows ... others may find it useful. A closed mind and a closed head are not the requirements of a level four qualification . . . and the world of " advice" does not revolve around - the restricted adviser. Anyone can give advice or suggestions . . .if you do not believe this then read a newspaper . . .in the event that you are unable to read . . . . . I recommend you ask someone to read them to you . . .

In these you will see many people have different views . . . and Freedom of Speech is essential . However, you do not have to listen !

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Dandy lion

Sep 16, 2013 at 09:25

Sorry mate, to busy to be bothered with you now, I have WORK to do

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Ian Lees

Jan 20, 2014 at 13:59

I have just received confirmation form The Treasury Select Committee - to confirm they have NO INTEREST IN FINANCIAL ADVICE ISSUES - or Fraud . . . or the Failures of the Financial Ombudsman ( Natalie Ceeney ) - or the incompetence of the Financial Ombudsman Service. Letter received today from Emma Hawkins Executive Assistant ( to whom we do not know - but we assume for and on behalf of the latest Financial Ombudsman - and their determination to cover up money laundering, Insurance Fraud, deceit and dishonesty by Round Tablers/ Forty One Club members and Rotarians ). It is clear no one will take responsibility - for fraudulent activities - and their cost to the state - the HMRC . . .. . .

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