Chris Cummings, AIFA director general, said: "The original intent of the RDR was far bolder than the announcements contained in today's publication.
"I see very little in it that will reach out to encourage more people to save more, invest for their future, or better protect themselves in an uncertain world.
"The reforms are largely focused on parts of the industry that were already in transition. I am extremely concerned about the substantial increase in the estimated costs of the measures proposed in the RDR.
“The intermediary market could be hit with costs of more than £100million, which will have a major impact on firms.
"These are difficult trading conditions and FSA must be mindful about heaping further costs on firms - it is not only these costs but the FSA's desire to see firms hold more capital and pay higher regulatory fees this year that need to be remembered.
"FSA has a duty to ensure that the reforms deliver genuine consumer benefit, which was the original objective of the RDR.
“We are working hard to help firms adapt to the changing market.
"I urge all intermediary firms to review their business model in light of these changes and plan the way ahead.
"Firms needing support should sign up to our business transition academy (www.aifaffwd.net), FFWD helps members see how to run more financially robust businesses.
"We are determined to help members adapt to the challenging conditions and develop services that help build better businesses for the long term."
Labelling
“There will now be a clear distinction between independent advice, which is unbiased and unrestricted, and advice that does not meet these requirements and is therefore restricted.
“Those offering restricted advice will have to make this clear in written and oral disclosure. However, we are disappointed that the FSA has decided not to enforce a specific set of words to ensure consistency across the market."
Professional standards
“Raising professional standards is vital to retaining and building consumer trust in financial services. However, we must develop an alternative to the current exams that recognises the extensive knowledge and experience of existing advisers. We will continue to work with members to develop an alternative for the profession."
Adviser charging
“We support the move for firms to set their own charges in agreement with the client. Accusations of commission bias have not helped the industry.
"We are pleased that FSA listened to us: it is right that clients will still be able to pay for advice through the product.
"We are disappointed that FSA decided to ban factoring, its role in helping grow the regular savings market was not grasped by FSA."
Regulatory dividends
“Change is expensive and change on this scale demands the co-operation of the regulatory authorities with the industry.
"It is only fair that regulatory dividends should be introduced for good firms. FSA should offer lower fees for firms that invest in developing their people, compliance and management, which then lowers the risk factor. Lower risk should bring less intensive regulatory scrutiny."
Post implementation review
“We welcome the commitment by FSA for a post implementation review of the RDR. However, we also think it would be sensible for the Treasury to ask the National Audit Office to conduct a value for money audit to assess the overall effectiveness of the RDR."
Pure protection
“We welcome the decision not to read across the RDR proposals for adviser charging and labeling to pure protection products. The pure protection market is a fundamentally different market to the wider retail investment market and warrants an alternative approach from FSA.
“We will continue to discuss the implication of these reforms with FSA and fight for a positive outcome for our members.”
