Financial advice reform delay would be 'disastrous'

A treasury Select Committee call to delay plans to reform financial advice has been met with dismay in the industry. MPs say the Financial Services Authority should move the Retail Distribution Review back a year, from its planned introduction on 1 January 2013.

Andrew Tyrie, the chairman of the Select Committee, said: "The current timetable for reform risks putting large numbers of experienced financial advisers out of business." He said the FSA should delay the RDR by a year to give advisers more time to take the qualifications and comply with the rules.

But the regulator, which first published its RDR proposals in 2007, is believed to be preparing a strong defence of its case for continuing with the current timetable. The FSA said it remains committed to implementation from January 2013 and pointed out: "There is clear evidence that the industry is well advanced in its preparations, with 49 per cent of IFAs already qualified and at least 82 per cent expecting to remain as retail investment advisers."

Kay Blair, the vice chairman of the Consumer Panel, backed the regulator's stance. "Four years have already passed since the FSA set out the overall objectives for the RDR. Further delay will only risk harm to consumers as the effects of poor financial advice – and the burden of opaque fees and costs – can last a lifetime."

Peter Vicary-Smith, the chief executive of Which?, said: "The majority of IFAs have worked hard to meet the deadline and have bought into the need to raise industry standards, but a minority seems determined to derail the process. Delaying the RDR would prolong consumers' exposure to the potentially disastrous effects of poor financial advice."