Retail Distribution Review (RDR)
The RDR, which the FSA have confirmed will be carried forward by the FCA following regulatory regime change, is expected to impact business models in the firms and sector affected. This makes it not just a compliance issue, but a business issue. All firms involved in the distribution of retail investment products to retail customers are likely to be affected to some extent and should by now be clear on the ways in which it will impact them.
The FSA's overall objective behind the RDR is to give consumers more confidence and trust in the savings, investment and retirement planning market. This is underpinned by 3 key aims:
- To improve clarity for customers on the types of services being offered and the differences between them;
- To raise professional standards; and
- To reduce conflicts of interests which result from remuneration practices and improve the transparency of the cost of all advisory services.
The FSA aims to achieve the above outcomes by:
- Increasing the professional standards of all investment advisers;
- Improving the clarity with which firms describe their services to consumers;
- Addressing the potential for commission to distort consumer outcomes; and
- Improving the sustainability of the market.
The FSA has now published final rules in respect of the RDR although there a will be further rules published during 2011. The rules come into force on the 31 December 2012, but firms need to take action now to ensure that they and the individuals working for them will able to meet their regulatory obligations on time.
Our team has kept a close watch on RDR throughout the consultation stages and we are well aware of the key issues which firms needs to address. We are able to help firms to assess the impact of this significant regulatory development and to prepare accordingly.