The Treasury Select Committee recommended in its recent report that the implementation of RDR be delayed for one year (until January 2014). The FSA has incurred the MPs’ wrath by seemingly flatly rejecting the idea and has sought to appease the situation today with a further statement.
The TSC’s report states that more time is needed for some advisers to prepare for RDR and that many who are not ready are leaving the market due to the changes. The report claims that between 20% and 30% of advisers are predicted to leave the industry, many of which are smaller firms or individual advisers. This has raised concerns about the impact this will have on individual savers and investors by reducing choice at the lower end of the market.
The report recommends a delay to allow advisers more time to satisfy the requirements of RDR (particularly the qualifications) and reduce the pressures associated with making the transition.
However, just hours after the report was published, the FSA issued a statement stating its intention to push ahead with the 31 December 2012 deadline for the RDR. The FSA statement said: “The RDR is already a long-running initiative. There is clear evidence that the industry is well advanced in its preparation.”
The FSA has been heavily criticised for its rapid response, in particular by TSC chairman Andrew Tyrie who has said that the FSA’s rejection of the report just hours after it was issued “..was precipitate, giving the impression that no adequate consideration had been given to the arguments for a delay”
This morning, Hector Sants, Chief Executive of the FSA replied, saying it was “certainly not the intention of the FSA’s brief statement to be seen as a pre-emptory rejection of any element of the committee’s report … I can assure the committee that the FSA is considering carefully the recommendations in the report and will follow its usual practice of submitting a full response. This will take some weeks, but we would intend to submit it by the end of September.”
It seems that MPs are finally voicing concerns from across the industry with regard to the timeframe for RDR but the criticisms do not go much further. The TSC’s report is positive on the whole about the changes RDR will bring so it could be that the MPs’ pro-industry intervention could be too little too late. In light of Hector Sants’ reply today, it will be interesting to watch in the coming weeks whether this was a token gesture by MPs, a re-awakening of the debate about RDR or even a re-balancing of the relationship between the industry, Parliament and the regulator. If the latter, the industry might feel more optimistic about influencing the passage of the new Financial Services Bill.