This morning saw a very interesting debate take place between MPs in Westminster Hall.
The Private Members’ Debate on the regulation of independent financial advisers was called by Harriett Baldwin MP, following lobbying from some IFAs in her constituency.
Harriet Baldwin spoke for around fifteen minutes, with regular interventions from the other twelve MPs in the room who all appeared to have been on the receiving end of similar lobbying from change resistant IFAs.
She described a series of arguments we have heard many times before from those advisers who are not prepared to improve their standards for the benefit of consumers.
After recognising that the retail financial sector suffers from low consumer trust, she went on to describe the potential unintended and intended consequences of regulation.
Some very interesting points were raised.
Baldwin asked about the relevance of forcing IFAs to pass examinations which include subjects such as international arbitrage. She also raised the impact of the Retail Distribution Review on small IFAs, particularly sole traders in rural areas.
She concluded with the reasonable suggestion that new higher standards could be applied at firm rather than individual level for larger IFA firms, enabling those with experience but not the necessary motivation or skills to pass exams to continue to give advice after 2012.
The second half of the Private Members’ Debate was led by Mark Hoban MP, Financial Secretary to the Treasury. He explained in no uncertain terms that the regulation of independent financial advisers is the responsibility of the Financial Services Authority (FSA), and not the Treasury.
With this one statement, Hoban effectively laid to rest any prospect of the Retail Distribution Review (RDR) being derailed by MPs or those IFAs who have been lobbying them.
He explained the importance of moving to a level playing field in terms of consumer confidence and how the long-term benefits of these changes will outweigh any short-term costs.
Perhaps the most telling statement made during the debate came from Hoban, who likened the current minimum qualification requirements for IFAs to the Diploma in Shift Management offered by McDonalds – hence the title of this blog post.
Standards have to improve and the Retail Distribution Review goes a long way to achieving the objectives set out by the FSA. Consumers need and want access to good quality, transparent advice from their IFAs.
Photo courtesy of wickenden.
