TCC is urging advisers to be fully aware of relevant RDR requirements, underlining the importance of being alert to what the review means for the industry as a whole as well as the impact it will have on individual businesses.
It has highlighted four key areas in the review.
Providing greater clarity for consumers
The FSA hopes to provide greater clarity for consumers by improving services and ensuring clients gain a greater understanding of where to go for specific types of investment advice. Money Guidance services will come under greater focus ensuring that advisers fully evaluate the client’s ability to repay debt. This will help ensure advisers undertake an in-depth approach into fulfilling their client’s requirements.
Raising professional standards of all advisers
Recent events within the financial markets have seen a reduction in consumer confidence. All advisers will be required to reach QCA level four standard which will result in greater levels of knowledge and skills being attained whilst there will be no grandfathering so all advisers will required to meet the standard. By increasing the level of qualification required it is envisaged that this in turn will improve the profile of the industry and mitigate risk.
Modernising the way advice is paid for
Changes to remuneration are aimed at reducing perceived conflicts of interest therefore reducing the reliance on commission and switch business and moving towards upfront fees paid by the client. In addition this places greater value on advice to the consumer not just in monetary value but also in professional value.
Introducing a new standard for independent advice
This would give two levels of service. Firstly, that pertaining to independent advice. This means the term ‘independent’ being representative of advice that is unbiased with a greater representation and analysis of the market. Secondly, there is the guided sale which the FSA sees as being for those clients seeking less complex financial advice. It is envisaged that this would fall in between an advised and non-advised sale.
Joanne Smith, Managing Director at The Consulting Consortium, said:
“Clearly the regulatory landscape is changing and there are those that will say it is about time. As with all change there is a certain amount of pain involved whether it is in the form of a change in process or the achievement of the required qualifications.
“The RDR gives the financial community the opportunity to engage with both the regulator and consumer. By improving perception of the industry we will not only increase consumer confidence but ensure there is a solid investment market on which to build.”
