6th April 2011

IFA Letter of the week

AN OPEN LETTER TO HECTOR SANTS - DOES THE EQUALITY BILL APPLY TO THE FSA?

Ageism is illegal in employment, training and education. The Equality Bill comes into force in 2012, making ageism unlawful in the provision of products and services where it has negative or harmful consequences. The Financial Services Authority (FSA) Retail Distribution Review (RDR) Level 4 Requirement threatens the livelihood of circa 20/30% of Independent Financial Advisers (IFAs) resulting in a negative & harmful consequences not only for those advisers but also to their soon to orphaned clients (consumers).

RDR Level 4 could be construed as "Indirect discrimination", under The Equality Bill which means having a policy or practice such as the Retail Distribution Review Level 4 requirement together with a refusal to allow grandfathering which places people (financial advisers) of a certain age group at a disadvantage compared with other people.

Recent study reveals that mental faculties starts to decline in later life. Therefore to apply a degree level 4 learning requirement to and industry whose average age is 54 (and to not permit grandfathering) could contravene age discrimination laws.

Other examples are given by this legislation such as a firm introduces a fitness test which all employees are required to pass. This could be indirect discrimination if fewer older employees are likely to be able to pass the test. Both direct and indirect discrimination are unlawful unless the discrimination can be justified.

RDR and old age
James Hay Wrap research shows: Average age of IFAs estimated at 54(1)
1This is based on industry sources. The FSA's "Financial risk outlook 2007" estimated the average IFA age as 46. James Hay go on to say: Our own contacts with industry sources that put the average ages at 54, 55, 56, and 58 years
Question:
Has the FSA taken legal opinion as to the compatibility of the Retail Distribution Review Level 4 Requalification Requirement with The Equality Bill which comes into force in 2012?

Regards

Simon Mansell

Adviser Letter of the Week