Money Advice Service under fire for RDR ‘ignorance'

Money Advice Service under fire for RDR 'ignorance'

WHAT'S RDR?

05 April 2012 •

The MAS was set up last year to take over from the Consumer Financial Education Body and, despite heavy criticism from advisers, has always insisted it is a champion of financial advice.

However, in a mystery shopping exercise undertaken by adviser support network PanaceaIFA, both the MAS and PAS came up short when asked whether any upcoming regulatory reforms would affect how consumers pay for advice (see box below).

Derek Bradley, CEO of PanaceaIFA, said: “They appear to have no knowledge of RDR taking place. As a result they seem to be dispensing incorrect information instead of working towards enhancing the understanding and knowledge of members of the public about financial matters and adviser roles in the delivery process of advice.

Staff at the Money Advice Service seem to be unaware of the RDR

“How can we expect consumers to know what 2013 will bring them if the FSA has not even appeared to inform its own partner organisations?”

A spokesperson for the MAS admitted the organisation has yet to train its staff on the RDR, although she insisted changes would be made “many months before the change actually happens”.

“Later this year, along with many other financial services firms and organisations, we will begin to let consumers know how the changes brought about by the RDR will impact them,” she said.

“We’re open to all ideas about how to communicate to customers and we’re working now with both the FSA and industry to agree our role in relation to communicating the changes to consumers.”

Mystery shopper

What the MAS and PAS told the PanaceaIFA researcher (abridged)

Researcher: “I have a couple of pensions that are run by financial advisers. I have very little to do with them, with the exception of them sending me occasional letters to inform me of how my pensions are going and whether or not I want to discuss with them making any changes.

"I was told by a friend of mine that, from next year, I won’t be able to pay commission to the IFAs running these and I would have to pay a fee instead for any advice they gave. Can you confirm that this is the case?”

MAS: “Financial advisers can choose whether or not they charge commission or a fee, and we are not aware of any plans for that to change.”

PAS: “It’s really down to the adviser to decide whether they want to charge commission or fee. If there is going to be a change it’s because the adviser decides to change their model and you would need to speak to them directly about that.”