The Financial Services Authority (FSA) is often accused of being out of touch with IFAs, but it is not an allegation that can be levelled at David Geale, the man charged with dragging the retail distribution review (RDR) over its impending finishing line.
Geale (pictured), appointed the FSA’s head of investment policy after his predecessor Peter Smith departed for Dubai in May, was previously an IFA before making the move to Canary Wharf.
Prior to switching from poacher to gamekeeper, Geale worked as a bank adviser. He moved on to become a financial and mortgage adviser for a number of small firms, and was an appointed representative of a major insurer before becoming an IFA.
‘I know where they [IFAs] are coming from,’ he said. And similar to IFAs, Geale has had his work cut out with the RDR.
While the majority of IFAs have come around to the merits of the RDR and the benefits it will bring consumers, there is still anger directed towards the regulator from some quarters over the manner in which it has communicated the reforms.
Geale, though, is adamant that advisers have ‘got more than enough [guidance] ahead of the deadline’.
Despite confusion remaining over the regulator’s definition of restricted and independent advice, he said the regulator had no plans to come out with further clarifications and that the final guidance should be enough for advisers to understand and follow.
‘We did quite a lot of research into the various labels we could use, and what we were seeking was something that was clear and that consumers had a chance of understanding,’ he said.
‘[Our] research led us to keep with [the] independent and restricted [labels] rather than anything more complicated than that. We could split hairs on “what do you mean by unbiased” and [some might argue] that there is a more standard definition of independence, but our research led us to that [the final guidance].’
Addressing the gap
Another area of dispute with advisers, even those who have embraced the RDR, is the extent to which the reforms will create an advice gap.
Critics argue the RDR will push advisers to focus on their wealthier clients who will be able pay their increased fees, to the detriment of their less well-off customers. Recently published research from consultancy Deloitte suggested as many as five million clients would be orphaned as a result of the RDR.
Geale sees it differently. ‘I’m not personally convinced that the advice gap, as some would like to call it, will exist or be that large,’ he said. ‘What we need to do is give
the RDR a chance. We’ll monitor what works. If things don’t work, and if we find that it doesn’t have the desired effect in certain places over a period of time, then we’ll address it.’
FSA research, published in the wake of the Deloitte report, backs up Geale’s view, showing 63% of advisers plan to retain clients with savings and investments worth between £20,000 and £75,000, while 38% will retain those with less than £20,000.
Winning the battle
Despite these remaining battlegrounds, Geale is pleased with the progress the FSA has made in winning advisers over to the merits of the RDR.
‘As people are going through the process of thinking about their business models and qualifications, we have heard from people, “I’ve gone through this qualification process and realised there are other things I can do with my clients to help them” and they’re [advisers] continuing along that path, which is great,’ he said. ‘There is a move toward professionalising the industry and we very much encourage people to continue along their journey.’
David Geale CV
2012-present FSA, head of investment policy
2009-12 FSA, sector manager, investments policy
2005-09 FSA, retail investment policy manager
2002-05 FSA, associate, retail investments policy
2001-02 Charcol, independent financial adviser and mortgage broker
1998-2001 Self-employed financial adviser/mortgage broker
1996-98 Halifax Estate Agencies, mortgage broker
1993-96 Lloyds Bank, financial adviser