Ken Davy, CEO of SimplyBiz, has condemned the FSA for failing to reform the Retail Distribution Review (RDR) in the wake of the financial crisis.
“To continue blindly on in the way the FSA has done has been fundamentally flawed,” he said.
“When you look at the FOS’s statistics, the number of complaint cases is tiny in relation to customer numbers”and “in a 30-year career, an average adviser might get two or three complaints.”
He goes on to suggest that “We’re going to see a reduction in the availability of financial advice and the cost of the whole exercise is going to far outweigh any benefit”.
Although he denied the possibility of a mass exodus into the restricted sector, he estimates that around 20% of advisers had either retired or reduced their permissions in the last two or three years.
The Retail Distribution Review establishes a specific set of guidelines that Independent Financial Advisors (IFAs) must follow when providing advice to consumers. The review aims to ensure that advisers are sufficiently trained and offer transparent, independent advice.
The recession has meant that consumers of financial products seek greater knowledge before purchasing a product and some would say regulations regarding IFAs need to be reviewed in the current format.
Davy’s comments come despite SimplyBiz’s Practice Buyout proposition being “reinvigorated” by the retail distribution review, which currently provides services to 50 firms looking to exit before 2013.
There are also indications that SimplyBiz will report a “useful increase in profitability in its annual results”.