MPs have branded the RDR an over-budget ‘fiasco' with a string of unintended consequences, and suggested it needs a re-think before implementation.
The panel of Treasury Select Committee ministers made the comments today at an evidence session on financial regulation, where they also rounded on advice sector representatives for failing to speak up when they believed the direction taken by regulators was wrong.
MPs said all the evidence they have heard so far points to the RDR being "potentially disastrous" and a "fiasco", with costs rising from £400m to current estimates of £1.75bn.
Conservative MP Andrea Leadsom said: "My fear is we are creating unintended consequences of no trust in pensions and savings, pensions which are too expensive, and a situation where people no longer save."
Giving evidence, Steve Gazzard, operations director at the Institute of Financial Planning, the Association of IFAs' director Robert Sinclair, and Tim May from the Association of Private Client Investment Managers and Stockbrokers' (APCIMS) said they had been lobbying the FSA for three years but their concerns had fallen on deaf ears.
Addressing the financial services representatives, Leadsom asked: "What you are saying is this is all potentially disastrous?"
The Committee has been taking evidence from industry figures as part of its inquiry into the Government's proposals to restructure UK financial regulation towards a 'twin peak' model, with prudential regulation of banks separated from oversight of consumer protection and market conduct.
Gazzard told the committee that future regulation must realign with what consumers care about which is the process of advice before the product.
"With RDR the government has been focussing on regulating a very small part of the process, picking the provider and product. Consumers who bring in a shoebox of tax receipts and past product details only care about financial planning."
Consistency and compliance vs. slower reaction time
Search for replacement to begin imminently
60+ £300bn ISA savings
Has technology moved on?
Total funds on list rise from 26 to 58