The FSA’s Retail Distribution Review (RDR) will have an impact on retail advisors (not just IFAs but advisers within stockbrokers, asset managers, banks etc.) in respect of commission payments (to be abolished in favour of agreed fees with clients); advice (independent or restricted); and professionalism (the benchmark qualification for advisers will be raised). The changes are intended to come into force on 31 December 2012.
Although there was approval on the plans to ban commission on advised sales and for imposing higher professional standards, MPs on the Commons Treasury Committee are calling for a delay of 12 months in implementing the RDR because of concerns that a substantial exodus of experienced advisers from the market could harm consumer choice. The purpose of the delay would be to give advisers more time to take the qualifications.
The call for a delay has ruffled a few feathers.
The FSA appear to have dismissed the suggestion of a one year delay which caused Andrew Tyrie, Chairman of the Treasury Committee, to write to Hector Santson 20 July about the Regulator’s ‘unacceptable’ response and advising that the Committee ‘deprecate the Authority’s action’. The FSA has responded to the effect that it in fact welcomes the Committee’s report, which it will formally respond to by the end of September.
Those that want a refresher of the changes can see the rules on adviser charging and independent/restricted advice in Appendix 1 of PS10/6 whilst those relating to professionalism can be found in Appendix 1 of PS11/1 (although most – but not all – of the changes are now incorporated in TC).