18th July 2011

IFA letter of the week

Although we still have to wait for a formal response I see the FSA has already underlined its determination to stick to the original schedule, so in effect they have rejected the report. I personally don't see it making any significant difference to RDR but may be wrong.

I feel there is a good case for delay but believe the TSC have made a mistake in putting the emphasis for this on qualifications. My view is that those who want to reach level 4 and are capable of it will have no problem doing so by the end of 2012 and those who don't want to or can't would not achieve it in the extra year anyway. The best argument for a 12 month delay is I feel, to allow firms more time to transition their business. Difficult to see how that can be done by 1 Jan 2013 when we are still waiting for the FSA's platform paper, platforms surely being a major part of any firm's post RDR plans, and their promised guidance Consultation Paper on the key regulatory issues regarding simplified advice. Whilst the TSC did raise these points I think myself they should have been given greater prominence. One very good thing noted in the paper is the need for clearer guidance from HMCR/FSA regarding VAT, but again until this is available how are firms to go about properly planning the transition from commission to fees?

The main worry for the majority of advisers must be the fairly solid references to level 6 qualification.

There are a couple of issues raised that I think have not really been thought through.
Grandfathering - really cannot see any U Turn on this. Poor idea anyway, unfair to other advisers.
Opt out for HNW clients - what's the point of this? They are surely the very people who can afford to pay for their advice without any problem and arguably at that end of the scale the requirement to be better qualified is most relevant.

Kind regards,

David Massarella

Financial Relationships

Adviser Letter of the Week