In a debate in the House of Commons called by Conservative MPs Mark Garnier and Harriett Baldwin, MPs outlined their constituents’ concerns on the banning of commission payments and the imposition of higher minimum qualification requirements.
Opening the debate, Garnier said it was not his intention to “derail” the RDR, but that its proposals in their current guise would lead to a significant drop in adviser numbers from 1 January 2013.
He estimated some three million clients would lose access to their IFA from that date, based on estimates of a 30% drop in advisers.
Supported by a number of other MPs, Garnier said some of the FSA’s existing concerns on mis-selling in the financial advice market stem from “assumptions and extrapolations” of previous scandals.
“How can it be that reducing competition results in better outcomes for consumers,” Garnier said.
The proposals to raise advisers’ entry-level qualification requirements from QCF Level 3 to 4, without permitting ‘grandfathering’ for experienced practitioners, was singled out for criticism by Garnier.
He said neither he or those supporting his and Baldwin’s motion could see “any reason at all” for grandfathering to be outlawed.
One MP said a constituent of his who had achieved the FSA’s Level 4 minimum still found it “ridiculous” the rules were being imposed on people who had been in the industry for decades.
Garnier said: “Many take exams without the dead hand of the FSA pressing them to do so. Many feel the knowledge they have gained surpass anything they can take from exams.”
He also raised the issue of a lack of a long-stop on complaints in financial advice.
“Indemnity underwriters take into account long-stop elsewhere, but this is not the case for IFAs,” he said. “It may be the case the complainant has a legitimate claim, but it may be the case the consumer is just having a go in our compensation culture.
“Is it fair that an IFA could be chased to the grave in a manner that no other profession allows?”
Garnier also raised concerns about the FSA’s capital adequacy rules, saying they could particularly impact medium-sized businesses.
