When Garry Heath undertook his report into the effects of RDR on the impartial advice sector in the UK following the introduction of RDR, even he underestimated the impact of his findings.
The report noted the dramatic reduction in the availability of impartial advice to the mass consumer market as advisers chose retirement over exams, the banks withdrew from the investment advice market and adviser firms were pushed into developing fee-based practices.
While the report did not advocate a return to the heady days of the pre-RDR market, it did correctly predict the effects on the mass-consumer market with few being able to afford fee-based financial advice and being left to make their own decisions.
From the United Nations to the European Union, the report was read and distributed throughout the world and held up as an example of what could happen if RDR was implemented in other countries. Eventually, the UK government asked the Treasury Select Committee to discuss the report’s findings and, in January of this year, they questioned the FCA and asked for a response. Garry Heath and Libertatem were present at those hearings and provided the basis for the TSC's line of questioning.
In June 2016 the FCA finally provided a written response to the TSC which disputed many of the figures quoted by THR2, but could only do so by amending the timeline and claiming that the time between the announcement of RDR and its actual implementation was irrelevant.
The TSC, in turn, requested a response from Libertatem to the FCA’s document and this was duly supplied. The TSC will be seeking another hearing with the FCA and it is hoped that Garry Heath will be called as a witness.
THR2 is, to date, the only fully independent report to have been produced on RDR and the aftermath. It was wholly funded by Garry Heath and a number of benefactors keen to prove to the FCA that the entire exercise had been ill-judged and poorly timed. In addition, it left 16 million consumers without access to affordable financial advice at a time when the government liberated pension funds.
THR2’s findings led directly to the formation of Libertatem. The report clearly demonstrated the role of the regulators in the demise of the impartial advice sector in the UK and highlighted their lack of accountability.
It also looked at the way they would be funded and concluded that advisers would bear the brunt of their costs, while the banks and insurance companies would be given the opportunity to expand their influence and increase their market share.