Outraged financial advisors in South West London are up in arms as national rules will force their customers to pay higher service fees.
By Hannah Friend, Cyrus Engineer, Hayley Fox & Pete Walker
Outraged financial advisors in South West London are up in arms as national rules will force their customers to pay higher service fees.
The Financial Services Authority hope the Retail Distribution Review (RDR) will establish a sturdier market where customers have greater confidence at a time when they need advice most.
Advisors are worried up-front fees, rather than varied commission, will lose them customers, especially middle earners. It comes into effect at the end of the year.
“They are dealing with us as if we’re all criminals,” said David Thompson, 64, an Independent Financial Advisor in Wandsworth.
“Everyone has been tarred with the same brush. It’s a big gamble by the FSA.”
An FSA survey in February found 7% of advisers plan to leave the industry as a result of changes.
Barry May, an advisor in Wimbledon, said he is not convinced enough research has been done and low-income people will be forced to seek free advice from banks.
Anthony Marsden, 55, an advisor in central London, said it’s more of an issue outside the city.
“Really I need a corner to spit in,” he said.
The new plans mean advisors can no longer charge commission, and include stricter regulation of independent advisor and require a university-level qualification.
As a result the FSA claims customers will get more for their money, along with increased clarity and professional standards.
“It’s an excellent idea. It’s refreshing because the learning requirements will be up-to-date,” said Maria Hunter, a tutor at A&M Financial Training.
She said the training centre has seen more people wanting to come into the industry.
Though, not all advisors oppose the changes.
“As a firm we are entirely happy,” said Chris Hirsch, 53, advisor from Kingston.
“It’s good because nothing is hidden and nothing is secret.”
The FSA hope advisors will no longer be influenced by financial motives, ensuring they act in their customers’ best interests.
A spokesperson said companies have been resilient and we have had a good reaction from companies who have made very good progress.
The RDR was created in June 2006 and companies have had until now to prepare. The FSA has provided workshops and seminars to help companies create revolutionary business models.
This change comes into effect on December 31 2012 and will affect more than an estimated 40,000 retail investment advisors in the industry in the UK.
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