- 1.
- an industry that engages with consumers in a way that delivers more clarity for them on products and services.
- 2.
- a market which allows more consumers to have their needs and wants addressed.
- 3.
- remuneration arrangements that allow competitive forces to work in favour of consumers.
- 4.
- standards of professionalism professionalism that inspire consumer confidence and build trust.
- 5.
- an industry where firms are sufficiently viable to deliver on their longer-term commitments and where they treat their customers fairly.
- 6.
- a regulatory framework that can support delivery of all of these aspirations and which does not inhibit future innovation where this benefits consumers.
RDR Executive Summary:
The Retail Distribution Review (RDR) was launched by the FSA in June 2006 fundamentally to reconsider how investments are distributed to retail consumers in the UK. The FSA has published various consultation papers on delivering the RDR.
Whilst undergoing a series of revisions since its inception some four years ago, the RDR remains a pivotal strategic initiative of the FSA.
With current investment advice practices closely allied with existing insurance and mortgage business, inevitably the RDR has potentially far-reaching implications for all involved in the financial services industry. The FSA has strongly resisted any calls for a delay in the implementation of its latest proposals and the deadline is set for 31st December 2012.
Through the RDR process, the FSA believes it has identified the various long-standing problems that impact on the overall quality of advice and restrict consumer confidence and trust in the UK investment market.
In a world of principles-based regulation, satisfactory consumer outcomes are all-important - the FSA is concerned with eliminating customer detriment.
Together with other elements of the FSA's retail strategy (e.g. Treating Clients Fairly – TCF, financial capability) the proposals are designed to tackle the major shortcomings identified within the existing regulatory framework.
In summary, the FSA is now consulting on rules to ensure that:
- Independent advice is truly independent and reflects investors' needs.
- People can clearly identify and understand the service they are being offered.
- Commission-bias is removed from the system and recommendations made by advisers are not influenced by product providers.
- Investors know up-front how much advice is going to cost and how they will pay for it.
- All investment advisers will be qualified to a new, higher-level, regarded as equivalent to the first year of a degree.
The FSA is calling on all investment adviser firms and product providers to consider how they will adapt to these challenging reforms. If implemented as proposed, the RDR will demand that all involved in the retail investment market, transform and modernise practices, significantly raise standards and embed rigidly the fair treatment of their customers.