I am compelled to write in response to this month’s ‘Comment’ in MM.

I am slightly surprised at your contention that things are not ‘actually broken but simply in need of better policing’. We have had incrementally better (or least tougher) policing of the industry for something like twenty years and many people outside the industry are unconvinced that much has changed in adviser/sales person behaviour. Any reduction in bad advice has come about mainly because many products are much harder to sell, for example, endowments, and the associated collapse of most direct sales forces and not because the system serves the public any better than it did. Policing alone is an inefficient and ineffective way of altering human behaviour and the cost impact falls disproportionately upon the law abiding.

Research conducted by the Australian Regulator found that where advisers where paid by commission, there was a six fold increase in the likelihood of miss-selling. These findings are unlikely to have been lost on the FSA and others charged with protecting the public, especially as the Australians are no less financially savvy than we British and possibly more so.

The advantage of the RDR to advisers is that it levels the playing field, no one finds themselves commercially disadvantaged if the whole industry is forced to change at the same time. Given that the average age of an IFA is well into the fifties, any sensible transition period should see many safely retired before they have to take too many exams.

Yes, the RDR is far from perfect but to suggest that more tinkering with the current set up is all that is required seems to fly in the face of reality.