“Financial services regulators appear hell bent on squeezing out smaller independent financial advisors (IFAs) with a raft of red tape and onerous new legislation.
The Retail Distribution Review (RDR), which comes into force in January 2013, is a legal hammer to smash the smallest of financial nuts.
By the Financial Services Authority’s (FSA) own figures, IFAs have an exemplary record. Despite generating around 70 per cent of the income in UK financial services, they are the source of just 1 per cent of complaints about the sector. That list of shame is instead monopolised by the big players, the high street banks whose cynical treatment of customers is a regular front page staple.
There will always be rogues but there are plenty of them, as we know to our considerable cost, in even the biggest financial organisations.
There is a strong argument here for a light touch approach to regulation when it comes to IFAs. But it seems as though the FSA is determined to squeeze out these small players, although they never say as much.
How else are we to read their actions? As the economy slumps under the weight of the woes created by our reckless lenders, it is the small IFAs who are bearing the brunt of a regulatory onslaught. The RDR is part of a wider avalanche of legislation that is weighing down small businesses with red tape.
Some claim that as many as 50 per cent of IFAs will be wiped out by the RDR and, while I think that’s excessive, there’s no doubt there will be significant casualties. Many of the more senior industry figures who are qualified by decades of experience rather than exams will simply retire, triggering an exodus of talent and experience. And how does that benefit consumers?
Why do this? When the bedrock of the UK economy and the much needed driver for our future growth is smaller businesses?
It’s bad for business, leaves consumers worse off and puts the brakes on UK plc, the RDR leaves us all out of pocket.”
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