MPs on the Commons Treasury Committee are calling on the Financial Services Agency (FSA) to delay implementing new rules on the provision of financial advice for 12 months to allow advisers more time to comply. The committee backed plans to ban commission on advised sales and impose higher professional standards on independent financial advisers, subject to flexibility on a case-by-case basis, but were concerned that a substantial exodus of experienced advisers from the market could harm consumer choice
Chair of the Treasury Select Committee, Andrew Tyrie MP, said:
"The FSA is right to reform the financial advice market.
Given the past problems of mis-selling we welcome the banning of commission and the introduction of a clear market price for advice.
However, the current timetable for reform risks putting large numbers of experienced financial advisers out of business.
In the interests of consumers we are calling on the FSA to delay the RDR by a year to give advisers more time to take the qualifications and comply with the rules."
The FSA's Retail Distribution Review (RDR) is a major reform of the regulation of retail investment advice and is due to come into force on 1 January 2013. It will require advisors to have qualifications equivalent to a Certificate in Higher Education and remove the system of commission paid to advisors and replace it with Consumer Agreed Remuneration.
The committee believes a delay of 12 months in the implementation of the RDR will reduce the number of Independent Financial Advisors leaving the market - thus maintaining choice and competition for consumers. The MPs also call on the FSA to provide some flexibility for advisers on a case by case basis.
The FSA is to be replaced by the proposed Financial Conduct Authority (FCA). This Treasury Committee believes that this provides an opportunity to examine the accountability mechanisms that will apply under the new system of financial regulation and will instigate an inquiry on this in due course.