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Tyrie wins advisers’ praise as he takes FCA to task

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by Michelle Abrego on Feb 10, 2014 at 10:12

Tyrie wins advisers’ praise as he takes FCA to task

Advisers have voiced support for MP Andrew Tyrie (pictured) and the Treasury Select Committee (TSC), following his criticism of the Financial Conduct Authority (FCA) over the impact of the retail distribution review (RDR), regulatory fees and execution-only services.

The TSC regularly scrutinises the regulator, but rarely does the advice sector receive as much airtime as it did last week when FCA chief executive Martin Wheatley and chairman John Griffith-Jones were hauled in for their biannual progress report.

Despite such high-profile issues as bankers’ bonuses and the ongoing Libor investigation, Tyrie and his cohorts decided to turn the spotlight on the FCA’s regulation of financial advisers.

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19 comments so far. Why not have your say?

Douglas Johnstone

Feb 10, 2014 at 10:56

Tyrie and his committee may be supportive but so they were over qualification where they requested a deferral which the (then) FSA ignored. I suspect the FCA go through the motions and then do what they wish to do anyway..

However at least it is good to know there is some support out there for IFA's .They certainly need it after the bashing they have unfairly taken in recent years with so little support from their industry leaders.

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Julian Stevens

Feb 10, 2014 at 11:02

"consultation on fees every year, which was agreed upon by the industry"?? And what if the industry were to disagree?

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Tracey Case

Feb 10, 2014 at 11:09

In a perfect world, commission would have been capped, FSA fees would have been lower, and lower value clients (like mine) would still have me advising them.

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Jonathan Kirby

Feb 10, 2014 at 11:22

My only hope is that if the FCA know that they are being watched they will adopt more sensible and realistic policies in future.

If they truly want to reduce the advice chasm, start with reducing over zealous requirements for small 'no-brainer' things like ISAs and Stakeholders.

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Lisa Williams

Feb 10, 2014 at 11:27

Tracey Case - you are so right - it would have allowed advice for the less well off along with reducing the commission take.

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Feb 10, 2014 at 11:29

Tyrie is critical of nearly everything to do with government and it's quangos. Rightfully so, as the inefficiencies, muddled thinking and sheer protecting backsides within these organisations is epidemic! If we as a group were deemed to overcharge customers due to a 'mistake' in cost analysis, would we be compelled to stump up?

If Wheatly really had consumers as his first priority, he would be advised to work with Andrew, not see him as an adversary. Collaberation, not confruntation should be his mantra.

Wheatly's heart is basically in the right place though, he instinctivly understands it is the dishonest, the criminal and those who see peoples savings as a legitimate target to enrich themselves, but not the investors, as the problem with financial services worldwide. If he can see a way to catch them, prosecute them then gaol them, we would be in a far better place.

But the years spent in the quagmire of the old FSA has taken it's toll and Wheatly has his staff of time servers, unreformed peoples champions and borderline marxists to turn first!

Tyrie is at heart a South East Essex man, level headed, balanced and immune from the PC culture that has spread like a desease throughout London and the home counties. He alone seems to be the only one who talks sense.

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Simon Mansell

Feb 10, 2014 at 11:35

History of conflict:

The King V Barons – Magna Carta

The King V Parliament – They cut off the Kings head

The trade unions V parliament - Winter of discontent

The regulator V parliament - collapse of the UK banking system

Hector Sants snubbed Tyrie and the TSC on the 9th of March 2011 and now it’s time for elected MP's to reclaim power and make our future regulator accountable to parliament.

Tyries knows the role of the executive is to enforce the law as written by the legislature and for its actions to be adjudicated upon by the judicial system.

We all know this is not the case in financial services. The FCA is therefore an abuse of power in a democratic system and as such a danger to us all. It seems to me that Tyries is one of the few politicians that has a grasp on the separation of powers and the abuse of power by the regulator.

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Mike Grant

Feb 10, 2014 at 11:39

The FCA would come down on IFAs like a ton of bricks if we had overcharged our clients (even if they agreed to the charges at the time) and would require us to compensate them. The FCA need to apply TCF principles to the same standard as expected of us. A failure to do so and compensate IFAs would be gross injustice and hypocrisy. Thanks goodness the TSC are exposing the failings of the FCA and RDR.

On the question of adviser number I am puzzled by the FCA figures as stated in the Citywire article:

"According to FCA statistics published in January, the number of financial advisers, not including bank advisers, increased from 20,453 on 31 December 2012 to 21,881 on 10 January 2014."

Why on earth were bank advisers not included in the statistics. Surely the mass exit of bank advisers is essential to assess the impact of RDR. I suspect this was part of the obfuscation and an attempt to spin.

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michael bates

Feb 10, 2014 at 11:41

Harm the IFA and you harm the consumer - fact at law (of agency).

How about IFA's not being regulated at all and the law of caveat emptor applying to them too? Then all they need is agencies with the product providers, a commission arrangement and lo and behold, the consumer no longer has to pick up the clear, direct cost of sales. Oh hang on, wouldn't that mean the end of IFAs and the result that Comrade Brown et al wanted in the first place?

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michael bates

Feb 10, 2014 at 11:44

Oh and THANKYOU Messrs Tyrie and Dampier

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Steve Holloway

Feb 10, 2014 at 11:56

I applaud Mr Tyrie and the committee for their support and exposure of the FCA and a host of other quango organisations, but unless they make them accountable they the regulator know they do not have to take any notice.

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Simon Webster1

Feb 10, 2014 at 12:37

~@Michael Abrego

"... [advisers] view [Tyrie] as a political figure with the profession’s interests at heart."

This may be convenient shorthand but is actually dangerous language. I suspect Tyrie does not have the profession's interests at heart per se - he cares about consumer outcomes - having done his research he sees advisers in general and IFAs in particular as the routes of achieving the best outcome for consumers.

I suspect where the interests of advisers and consumers diverge he would be backing the consumer every time - which after all is his job!

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Ian Lees

Feb 10, 2014 at 12:48

In a simple world commissions could have been capped e.g Maximum commissions agreement - but this was flouted by insurance companies offering up to 180 % of Lautro - did not remove bias or the buying of business through commission payments - rather than " Service Standards", or qualified or technical employees assisting Brokers to assist clients - to help them in their quest for finding new business and building great client relationships. Instead these inept companies choose to refuse agencies refuse to accept new business form Brokers, Independent Financial Advisers and Financial Planners - as an inherent element of their " business strategy ", to bully advisers . . . . to install fear of reprisals by insurance companies. For example Scottish Widows who refuse to provide agencies - Standard Life who refuse to accept NEw Business - or increments, from existing clients Fidelity who refuse to accept New Business - or ANY business ( because Standard Life run the Fidelity Funds - and their decision is final ). The company Chairman and Chief Executive officers and Sales Directors must take full responsibility for their unprofessional actions - their appalling and unprofessional service standards, their lack of support to advisers BUT more importantly their lack of judgement and lack of service to clients - and most importantly their failure to look after clients money. These unprofessional companies - their bullying ways - and their lack of integrity toward clients or advisers - has seen - their Gross Negligence - their failure to meet the FCA Rules and Code of Conduct undermined and gone unchallenged - and permitted under FCA Rules by a reckless, and it appears a mainly Negligent Regulator. Treating customers fairly ? or just product providers paying lip service - and undermining the good work of the FCA.

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Feb 10, 2014 at 13:27

@Mike Grant

"Why on earth were bank advisers not included in the statistics."

......because if they were the truth would come out. Consider a firm with, say, 25 IFAs who take on 5 people from the banking sector. IFA numbers at that firm have increased by 20% ! Great eh? Except that those 5 people are on a steep learning curve, cannot possibly be termed experienced IFAs, and may not even survive in the new environment.

It will be interesting to see how the numbers pan out in 2 or 3 years time, but in the meantime for Wheatley to suggest that "consumers are much better served now" is outrageous.

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Mike Grant

Feb 10, 2014 at 13:51

@ Stratfield

Good point. If the increase in adviser numbers is explained in part by bank advisers joining IFAs then all the more reason to take into account the reduction in bank advisers. I perhaps should have written why on earth did the TSC not ask for statistics on bank advisers or if they did, did not the Citywire article mention it?

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Bruce Johnson

Feb 11, 2014 at 12:43

@ Mike Grant

@ Stratfield

This just encapsulates the whole thing.

The FCA like the FSA can get away with being very economical with the truth, about anything they say, because they know that they will not be accountable to anyone and they will never be asked the killer questions by either the TSC or the press, because the TSC and the press do not know the right questions to ask.

Surely if you are on the TSC and you are going to ask a question on IFA numbers, then you should have gathered some data from various sources prior to the meeting, so that when Wheatley says the numbers have gone up, the next questions would be:-

"And how many of the increase is made up of Bank advisers who are not included in the first number?"

"And how many of the "increase" are actually IFAs who were deregulated on the 31st Dec 2012 having not ticked all the boxes, but were re regulated by the 31st july 2013 once they had all their boxes ticked?" ( I know of about 20 who fall into this last category.)

This will not change any time soon, because these quango's know that they are almost bullet proof and even when, like the FSA, they are described as "unfit foir purpose" and condemned to be culled, they can still spin it out for a few more years, and no one among the heads ever gets any dirt landing on them as they move smoothly onto the gravy train outside of the quango.

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Charles Rickards

Jun 05, 2014 at 14:27

Why not make giving advice easier? Whether it can be simplified or not remains to be seen, I am personally not convinced, but it may be that financial product sales can be simplified, rather than advice per se.

Consumers do find it more difficult to get advice, largely because of the cost and the restrictions imposed by the RDR for adviser remuneration. Look at the impact on regular savings contracts such as pensions etc.

In many respects the old whole of market or tied situation was much easier for consumers to understand. There is still a lot of confusion about exactly how restricted advice models impact on consumers as many restricted models are as good as independent to most consumers, but the word restricted, does put some consumers off.

My suggestion of the day is that the FCA involve the adviser community in setting policy in order that the most efficient outcomes might be achieved.

And before anyone says anything, it is good to dream!

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Charles Rickards

Jun 05, 2014 at 14:42

Surely the important number is how many CF30s before and how many now? I am personally benefitting from the reduction in adviser numbers and may even have the luxury of being a bit choosy about who I work for!

The FCA should be making efforts to encourage more people to want to become advisers and provide services to an increasing number of consumers. It is unlikely they can do this effectively without help from advisers.

I would be pleased to help, if it would help to produce a beneficial outcome for all. But not if it is going to be a waste of time!

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Julian Stevens

Jun 05, 2014 at 15:04

"make giving advice easier"? Definitely not part of the FCA's gameplan. The result might be less jobs at Canary Wharf and that would never do.

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