The truly horrifying and calculating way the FSA considers the livelihoods of individual advisers was revealed in its true colours today at the Treasury Select Committee hearing.
Replace how many advisers are needed to serve consumers well with ‘levels of capacity' and you have an idea of the Dickensian way in which Canary Wharf works.
The TSC and FSA seemed polls apart today with irate MPs representing their constituents or ‘real people' and the regulator representing a filing cabinet filled to the brim with statistics.
However, at several points in the debate the FSA machine did not even have their stats to hand. There were embarrassing pauses when an MP asked them for figures on the average age of advisers, and they were unable to fall back on their own knowledge of the sector. The TSC member then filled in the blanks by highlighting the number of advisers in their 50s or 60s.
We then had the farce about how many advisers could potentially exit the industry post-RDR and the ‘detriment' to consumers. CEO Hector Sants apologised for upsetting advisers with his previous comments about exit figures, which advisers will be relieved to hear are not now as high as the 20% previously calculated.
The number of advisers leaving could now be between 8-13% with an average taken of 10%, Sants said calmly. But this does not necessarily mean the number of firms, Sheila Nicoll added. Confused, you should be because Sants and Nicoll clearly were.
The TSC probed further, arguing this is just the number of advisers and there are all the support staff out of work if a firm goes under. No answer to this but you could hear Sants' brain whirring. Back to the stats department at FSA HQ for more number crunching.
I am sure many individual advisers forced out post-RDR will be delighted to learn they are only one of the 10% who will be leaving and "in the round" the situation will be better for most people most of the time.
Sants made the point the aim of the RDR was to improve the situation "in the round"- a phrase he used frequently during the debate-but he would not commit to a 100% success rate.
The FSA says it will be doing a vast body of work to see if the RDR is improving outcomes for consumers. How this will be measured I don't know. A reduction in mis-selling scandals? A rise in the number of people happier with their advice? If you can put a figure on happiness that is.
What the FSA have failed to add into their number-crunching machine is that this is a people business. You can't attach numbers to the adviser/client relationship or the livelihoods of individual advisers. It is this failing to see the people behind the stats which may just be the undoing of the whole RDR.
Katrina Baugh is editor of IFAonline and Professional Adviser.
E-mail: [email protected]
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