What is RDR?
After 25 years of regulation of the industry the FSA decided that as long as commission is paid to advisers for the advice that they give there will be bias to their recommendations. in June 2006 they began a far reaching initiative that is designed to:
- Improve the clarity with which firms describe their services so that their customers know whether they are getting advice that is truly independent or whether it is restricted in some way;
- Address the potential for commission bias to distort consumer outcomes;
- Increase the professional standards of advisers; and
- Ensure that personal investment firms (PIFs) have adequate capital resources for complaint redress.
"We have been constantly talking about these four key strands, and in three of these areas, charging, advice description and capital, the final rules are in place. There is no excuse for firms and advisers not to be making progress towards the end of 2012 deadline."
Speech 14th Jan 2011 from Peter Smith, Head of Investments Policy, Financial Services Authority |
A deadline of the 31st December 2012 was put in place to have the new rules in force to deliver these outcomes. For each proposal the process of consultation has lead to review and amendment to arrive at the final rules that are nearing completion in the early part of 2011.
There is a special section of the FSA's website which pulls together all of the information on the RDR which you can find here.
At CTP we are concerned primarily with helping advisers to meet the new professional standards and the consequent changes that will need to be made to:
- present clients with a clear picture of what they are being offered as a service
- explain how they will pay for that service
This is a fundamental change to the way we do business and a complete overhaul of most Training & Competence schemes as well as sales processes. For the industry to thrive and clients to feel the benefits of this change it is important that we all look for the advantages rather than focus on resisting the change.
Click on the other main menu options to understand the issues and implications of RDR