RDR feedback 25 November: what role for the banks?

To me this is not impressive at all, anyone with any sense would shelve the whole thing until things settle down a bit.

The current turmoil may highlight areas which could do with altering and they could be built in to the RDR.

The whole industry is suffering at present, after the current turmoil there may follow a really bad recession where all financial services could suffer eeven further and let us face it the industry is in terrible shape for a relatively young industry to begin with.

Soemtimes it is best to shelve some plans for a little while, I think the current climate is one of those times.

You must be dreaming. Any notion of the RDR affecting banks is dead in the water. They now will have a license to mug, rape and even murder – all in the national interest of course. If that means that the idea of polarisation, commission disclosure, sales versus advice, and anything else has to burned on the altar of expediency - so be it.

Fine a nationalised bank – are you kidding!

Just look at the margin between current base rate and the mortgage rate NOW charged by the three in trouble:

Bank Base Rate 4.50%

Margin

Lloyds 7.00% 55.56%

Barclays (Woolwich) 7.14% 58.67%

Nat West 7.19% 59.78%

The LIBOR margin will now no doubt come down, but the banks have the government’s blessing to make as much money as possible. Sure they’ll lend to business – but at what rate. The Barclays AGREED overdraft rate for small business is currently 16%!!

Regulation in general is now in disrepute, with practically all commentators questioning their efficacy. Perhaps the most trenchant was Prof. Philip Booth in the Telegraph back on 18th September. (That now feels like a decade ago!).

The effluent hasn’t just hit the ventilator it has just submerged us all.

As far as IFAs are concerned the RDR will no doubt be altered to make life even more difficult for us - we are easy targets and what better way for the Regulator to show that it is actually doing something (for a change).

Imagine that the RDR had been three years earlier, the original plan was rolled out before Northern Rock ever got in to trouble and the banks had the favoured position that the original RDR outlined for them.

The FSA would be in it up to their necks.

How lucky where they??

Makes you wonder if Tiner didnt know a little more than he was letting on before he tip toed out with his tax payers party.

Maybe the Budget for the RDR should be redirected to financial education in the short term. Most people now realise (some the hard way - Icesave) how important it is.

We should rename the RDR - RDWR

Re-distribute wealth review.

Until the Financial Pass the Parcel stops, who knows what they are unwrapping?

What action to take in the meantime?

Business as usual - a broad spread of assets.

Good Farm land - Now that doesn't dissapear (Unless you build on it)

Funeral Homes, crematoriums and Cemetaries - Always necessary

Possibly the RDR may be more important to the government now as they own all of Northern Rock, 60% of RBS and 40% of two others.

If they direct the majority of non millionaires to the banks then it may help pay off their massive debt. The clients may not get any growth and there is always the possibility that they can go bankrupt but hey who cares.

Makes their handling of equitable life an absolute disgrace, one rule for one side of the financial insitution world another for the life offices and advisers.

Support the banks review-Phil

It has got to be assumed that banks will have their activities restricted after this debacle. I don't doubt that the cost of banking will sky rocket as they try to refill their vaults by charges against rank and file accounts, lending or otherwise.

I would love to think that the banks will do the honourable thing and retract to being bankers in a real sense and leave areas best left to professionals alone but I doubt it.

The RDR has the capacity to bring the whole mess into line but it has got to be assumed that the template for that level of change will have only been discussed since the last few weeks because nothing was wrong at all before then (yes, sarcasm) with our wonderful bankers.

Oh for a white Knight with the FSA on his chest, pants on the outside of his trousers with no vested interests and common sense in his head re the RDR, then there would be a harvest of fines like you have never seen to date.

let them call themselves Advisers, if they are suitably qualified - to Dip level as a min.

Otherwise they should be restricted to Cash ISA's, Stakeholder Pensions, Lump sum investments no higher than £10,000 & not to be able to invest more than 50% of client/customers capital. No advice on IHT, Long Term Care Fee planning, Offshore investment etc etc

This mess we're in at the moment has nothing to do with advisers not having higher qualifications David F and having Dip or above would not have stopped it.

I don't have Dip yet. So what?

If mroe common sense had been appleid from the top down and less lies and opacity, this mess might not have occurred. It is our supposed betters who have built up this house of cards and been playing financail pass the parcel with toxic debt and unregulated derivatives along with our PM and former governer fueling a consumer boom based on credit alone (see relevant quotes if I can find it)

Don't tell us the solution is more qualifications promoted by the very instutions who want to make everyone think the same way as they do or restrict business.

The heart of the RDR it to educate clients and change our industry so it is recognised as a profession, so why delay it any further?.

As an adviser who works for a bank I believe a number of comments posted are at best mis guided. I know that some in the IFA community are likely to try and take advantage of the negativity associated with Banks but please take a moment to think about the relationship between yourselves and your own bank. Do you feel any responsibility for this market turmoil? Do you believe an advisory firm within a Bank has any more responsibility?

I think some of us are. The whole point of RDR is to drive standards upwards, I am not going to drone on about exams and the like.

However we all have to realise a benchmark is needed. One that is clearly defined and easy for the public to understand.

If this means banks or IFA's having to undertake additional study, along with a commitment to measured levels of CPD, then so be it. lets all get on with it.

If banks or IFA's feel this is a step they dont want to take, then don't. however don't expect to still be able to conduct business in the same way as those who have/are taking the steps to raise the board.

Harry is correct not only is the taxpayer the lender of last resort.

The taxpayer and odd non tax payer is now going to have to pay out real money on the other side to repay themselves!

They think it's all over... "

TFC ?

"It is now "

The current bailout has cost £37bn so far to the UK government unless I missed something else today.

Prudential have something like £200bn in one of their larger funds.

That is just one provider and one fund.

If the banks had built up anything like that amount even in all of their funds and the panic started how would any government afford to bail them out?

The current issue is liquidity, how would anyone cope if those sorts of figures of money started moving in addition to the current problems??

Northern Rock for instance would have had a run on the bank accounts, a run on their RDR fuelled investment business and their mortgage problems on top.

I hope the government looks at the level of the current rescue packages and calculates the maximum it could have done, then makes sure it doesnt create a monster that it cannot rescue in the future.

As Governement owned instituitons already drive a cart and horses through the rules which apply to the rest of the industry in terms of finacial promotions - witness the apparently "completely risk free" nature of preimuim bonds (according to Alan Sugar) - I look forward to seeing what sort of standards are applied to the new civil servants.

May I suggest that the regulators scrap RDR .If I was Lord Turner I would have a root and branch reform the whole organisation .I know this will not go down well with Gordon (after all it was his baby) .Clearly events over the last few years have demonstrated that that the one cap fits all policy does not work .For example the FSA should have financial adviser division(similar to the PIA) Dare I say it he ( Lord Tuner ) should bring back some of the principles of self regulation .By that I mean that we have representation at the decision making level .Not only would this enable more efficient regulation ,it would bring back a common sense approach to what is practical to restore confidence within the whole system .As many of you have stated the ICESAVE saga has underlined the need for good quality financial advice .

As for the bank if they want to remain in the financial advisory sector. .They will have to be run as a separate organisation with its own management structure and their office separate from the banks. In other words they like us would have to stand on their own to feet and be judges by quality of advice they give.

You have a good point there Ian you can just imagine 5 years into the new regime and the banks marketing department mulling on what fund to sell next.

Hmm? I (bright spark) I know what about a low risk money market fund - a distressed debt moneymarket fund - we can recycle our loans away from our balance sheet and into our own funds that way we make even more money inhouse and we can still buy repackaged debt in from others as the fund grows and we can trade what we have to other banks and funds who are sure to follow.

Yes the temptation is to big and "profitable" not to do it and the regulator would have welcomed it with open arms as it would have been seen as a way to create an "orderly" market. And that the financial institutions would self finance the market and if one fund or institution were to get into trouble then the others would fund them by trading or buy them out.

Hello John,

I never took it that far, but that would be a possibility, could it have happened already I wonder with one or two companies who would have that capability now?

To Steve H (not Steve Harknett is it?) - There is nothing wrong per see with Bank advisers. They are not more dishonest or honest than any otehr adviser. I do think John Whipple does have a good point about needing to stand seperate on their ow two feet in order to be objectvie and avoid potential conflicts of interest.

To David Finan and Stephen Jones, I thought I knew what the letetrs RDR stood for, i.e. Retail Distribution Review, a review of how financial services are distributed NOT what qualificastions and barriers to entry we want to put in place. None of your qualification suggestions would have stopped what we have seen with the Lautro Charges debacle, foisted on the industry by actuaries and still hidden with the conivance of our regulator and trade bodies.

The reason why I am posting late today is because I was sitting J03 today and sit JO2 tommorrow.

I am NOT anti exams, I am anti compulsion. we should differentiate oursleves to clients be explaining our level of qualifications so they can decide what level of qualification the wish to pay for. Let the market decide.

And for anyone who ask as you may already be aware I resigned from the CII in February 2008, but like most companies they were incompetent enough to claim the direct debit even though they confirmed my resignation and suggested I reconsider.

I don't want to be part of a "profession" who tells me what to think or do that is why I left a bank in the first place, i.e. they were trying to persuade us to sell products I don't not believe were appropriate to the changed market post removal of MIRAs.

It now transpires from the Information Comminssioners meeting on the Lautro 13, 19, 20, the FSA were aware that many insurance firms had made contractural misrepresentations and a deal was agreed behind clsoed doors which has meant innocent parties have picked up the tab, i.e. retired advsiers andus via the FSCS for those firms in default. So anyone who goes on at me about it being essential to have higehr qualifications when the head of the failed Equitable Life was an actuary can just forget it.

a little additional stress in the current climate, what were you thinking of 2 exams!!

We both agree about the exams, they really hack me off, I am studying J06 (investment paper), thought it would be handy to see if they explained what happens when governments issue loads of treasury stock etc and flood the market, would it affect index linked gilts etc, although it looks like inflation reducing may take care of those!!

Really handy about six lines and loads of history class but absolutely useless at just generally explaining what happens here if that happens there etc, complete and utter crap to be honest, although I have to say the current update is a slight improvement on the last.

Best of luck with the exams Phil, and we are all sure you will be a better adviser for passing them especially when you can get back to useful CPD afterwards!!

It clearly demonstrates intelligence studying a subject which you will only use 10% of if you are lucky in your everyday work even if you study the very subject that you specialise in!!

Still better get on with them, they are all we have.

Adviser impartiality beats qualifications - consumers

Wednesday 15th October 2008: 16:15

http://www.ifaonline.co.uk/public/showPage.html?page=ifa2006_articleimport&tempPageName=820980

I found the second version quite good and there was some info in there i am finding useful in allaying the fears of concerned investors.

How did you find the exam yesterday btw?

To phil. I agree with you on one point about not being told what to do,(re:exams) I know many advisers who knowledge goes beyond the mere text of a J0 whatever book. However I also know of some advisers whose actual standards and understandings of investment markets leaves much to be desired. It is these advisers, wether bank, tied, IFA, whatever that have driven this ship to where we are now at. If the RDR forces professional standards up, or forces those who are way below standards out of the industry, then so be it.

I cant hep but comment regarding qualifications.....aits always the ones with lots of letters after theirnames that harp on abouthow impotrant it it ( they are ?) to have this and that additional qualification....

Id pitch my skills agains the best of 'em for common sense... and and people skills.... and caring about the client.... and and say that my cleints UNDERSTAND what they are doing with their money and understand my advice!

I agree their needs to be a level one must achieve but enough is enough and oyu simply cant buy or learn the knowledge accumulated over 25 years in this industry...and Im so flexible im a bendy toy when it comes to learning and doing this job!

JO3 wnt OK I think, but I was off sick and missed JO2.

Re your observation - " I also know of some advisers whose actual standards and understandings of investment markets leaves much to be desired." My whole point is that exams do not measure "standards, honesty, integreity or common sense". A lot of the mess we see is eitehr from a lack of common sense or lack of integrity/obfuscation, including from the F Pack who are very good at not giving answers to straight questions.

I have been asking for over a year for true clarity on what the FSCS actually covers and in what circumstances. When is a collective investment covered by the FSCS, NOT covered by the FSCS etc.

We see betting syndicates which are deemed to be collective investments and hence are prosecuted for not being authorised (correctly so perhaps) and now we see structured products where some are fully covered by FSCS and some the counterparty risk means they are not if the underlying bank (Lehman's for instance) defaults on its debts two days after ceasing to be AA rated.

What about the Woolwich bonds of a similar nature sold by Woolwich and backed by Woolwich/barclays staff? Logic says therefore, a client would be able to claim under FSCS in all instances with theirs as if Barclays failed, then whilst the counterparty risk element might not be covered by FSCS, the client could complain the advisery arm didn't make fully aware of counetrparty risk and then FSCS would have to pick up the tab again (i.e. us)!

RDR MUST seperate advice from sales and product manufacture from advice too.

Qualifications are acomplete red hearing. If the FSA are to focus on principles based regulation, then on principle they should be much more focused on intent of the adviser/firm and outcomes and not whether the adviser has this that or the otehr qualification.

One day I'll get a dictionary or a new set of typing fingers. I do know how to spell herring and that for hearing you need ears not Gills.

I blame my two finger typing and passion about what we do.

I worked for a major high street bank for a couple of years and the one thing qualifications will not affect is the hideous pressure put on the sales force to hit target. The bank i was employed by had for want of a better word a 'churning' rate in excess of 60% and were and still are actively targetting with profit bond customers to meet targets. I did a new investment of £1 million for client with commission of £45,000 and when i suggested to my sales manager we should rebate a large portion of this his response was to threaten me with disciplinary if I even mentioned it to the client as that was most of his months sales target.

Qualifications are of little use in a Bank unless you can get the client to sign on the dotted line and meet your target your long term employment prospects with them are not good ..... but I suppose with qualifications you are more marketable when the inevitable personal support plan comes along for underperformance.

Apologies for ranting but I get angry at the greed I experienced.