IFAs the scapegoat for regulators’ failure, says Nelson
Nexus' managing director claims the FSA is introducing RDR to make it look better in the aftermath of the banking meltdown rather than for any benefits it will offer to the industry.
IFAs are being treated as scapegoats by regulators who are trying to shirk responsibility for the financial crisis, according to Kerry Nelson (pictured)
, managing director of Nexus Financial Planning.
Nelson believes the tough requirements being brought in by the Retail Distribution Review (RDR) are unfair given the easier ride other parts of the financial services industry have been given.
"We are an easy target and we always have been because we are far easier to regulate," she said.
"The idea behind RDR is right
we need to be a professional industry – but the FSA hasn’t listened and it’s not a collaborative relationship."
RDR will bring in new requirements for advisers to possess qualifications or work towards them and it is widely believed many will leave the industry rather than re-qualify.
Nelson added: "We were already in the firing line before the crash and nothing’s changed. The IFA sector gets fewer complaints than other parts of the financial services industry and the FSA should be supporting us publicly."
She says the FSA itself was to some extent culpable in the events leading up to the crisis.
"They got away with their role in what happened in the past five years. They should have spotted the problems in the banking sector, but they were sending junior staff into the banks who were no match for the bank’s own people."
Last month Rathbones' chief investment officer Julian Chillingworth told FE Trustnet
that he expected up to 50 per cent of IFAs to be wiped out by RDR.
Half of the FE Trustnet
readers who responded to a website poll said they thought at least 25 per cent of IFAs would go out of business.
Meanwhile industry insiders claim they are already seeing a flow of work
from small IFA firms to large fund houses.
However Chris Spear, managing director of Spear Financial Services, believes many of the regulatory changes are necessary.
"When I worked in the insurance industry I wasn’t always sure IFAs were acting in the best interests of clients, and commissions were properly composed, so I understand why they’ve done what they’ve done," he said.
"There’s no harm in getting qualified – some things like the gap filling look a bit unimpressive."
"However, you can’t tar all advisers with the same brush. There are a lot of good people in the industry."
Although he is in favour of reform, Spear thinks the absolute emphasis on fee-based advisers is misguided.
"I think they’ve gone a lot further than they needed to with the banning of commissions. A lot of clients liked commissions," he explained.