2nd June 2014

The Heath Report Launches

The purpose of the report will be to create a firm basis on which to assess what RDR has done for consumers and to discover if the regulator has itself inflicted detriment on consumers. The Heath Report does not seek to overturn RDR as a whole but we may seek to inform the discussion as to whether the changes envisaged to trail commission in 2016 would exacerbate an already poor situation. In particular we seek to give a voice to consumers who have been left behind by RDR.

A report has been commissioned by a group of industry leaders to determine how many consumers have lost their advisers due to impact of the Retail Distribution Review. 

The Heath Report will research how the changes created by RDR have affected the provision advice for consumer particularly for those on modest incomes and will be edited by Garry Heath - the award winning ex-Director General of the IFA Association.

The Report will seek to produce reliable statistics, the absence of which has hampered informed discussion on the imposition of RDR. 200 simple questionnaires have already been sent to advisers and responses are already being analysed. The numbers will increase to the thousands in June and Panacea Adviser will be helping publicise that process in July.  In addition, The Heath Report will seek a number of advisers both active and retired, who are willing to allow in-depth research on their businesses to create a number of case studies which will identify the true effects of RDR on clients.

Garry Heath comments “We can identify from the FCA’s own register that a net 10,000 investment retail advisers have left the sector between February 2011 and February 2013. If each of those had 600 clients we could be looking at 6m disenfranchised clients – just from the exiting advisers. However we need evidence that exiting advisers actually did have 600 clients each and how many of those clients have been double counted by being serviced by more than one adviser.

Once we have defined how many clients have been disenfranchised by their adviser leaving the industry; we then to see how many more may have been disenfranchised by changes that charging fees has made on the number of clients each adviser can now handle. There is some evidence that most advisers are hard pressed to give a fee based service to more than 120 clients with the average rumoured to be less than 100.

If we accept that average; the current adviser establishment at 30,000 would be able to service only 3m active clients in total. The ABI statistics office informs me that 12m UK consumers are deemed by them to be IFA clients and their figure does not include those consumers who only invest through unit trusts and similar non-insurance based products. So at least 9m clients appear to be missing! Again we need to define the numbers.”

With a year to go before the next General Election, politicians need to be given the opportunity to give significant thought to current Financial Services Regulation and the dangers to democratic accountability of having a regulator which has precious little political oversight. 

Heath continues “In the last week, I have been making contact with a number of influential Parliamentarians and have discovered a considerable appetite for this type of activity.  I am sure we can interest members of the Treasury Select Committee as well as getting an adjournment debate on the subject.

The Heath Report is seeking information from the adviser community as well as additional funds to expand and complete the work. Contact www.theheathreport.com

Regulation, RDR