FCA Thematic Review – RDR So Far

How are firms adapting? 

The Retail Distribution Review (RDR) was implemented on 31 December 2012 to ensure that financial advice is provided by appropriately qualified financial advisers, is free from bias, is clearly explained and is transparently charged.

RDR has resulted in new and updated rules to improve the clarity with which firms describe their investment advice services to consumers. The rules set out what is expected of firms that describe themselves as either independent or restricted.

The FCA is currently conducting a three-stage thematic review and the first part of that review has recently been published. The document is called ‘TR13/5: Supervising retail investment advice: how firms are implementing the RDR (July 2013)’ and can be found here.

There is also a Fact Sheet that provides a summary, available here.

The review highlights numerous concerns, primarily around the description of services provided (particularly the standards of independence), the disclosure of charges, the clarity of service descriptions and the controls that firms have to monitor standards.

The FCA states, “Firms should carefully consider the feedback covered in this report. We strongly encourage advisers to look at the examples highlighted, and take immediate steps to help their customers better understand the charges and services being offered.”

“We will be doing follow-up work in October this year to check whether firms have acted on our concerns.”

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

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Our View

 

The challenge for any firm lies in how best to meet the RDR requirements in a way that delivers the desired outcomes for both your clients and your business. One of the biggest challenges is evidencing your independence (or the restricted nature of your services and advice).

Perhaps the biggest challenge of all however is understanding how you do this!

This is where ATEB can help as we have a very clear understanding of RDR requirements. We can assist firms in designing investment processes that demonstrate whole of market, independent advice. Please contact us for further information.

Action Required By You

 

It is therefore vitally important that you review your approach now that the FCA has published initial results from their first review of RDR practices.

To assist you in this respect, we have produced an additional guide to help firms to undertake a critical review. In this guide we remind firms of the key requirements and provide a synopsis of the FCA feedback, together with our views and commentary, as well as some helpful checklists.

We also provide a useful tool that we prepared well before the implementation of RDR that allows firms to check their compliance with the relevant rules. 

Whilst any guide is useful, we would nevertheless suggest the real value lies in engaging with your ATEB consultant.

You can download these documents here:

ATEB Guide: RDR So Far (August 2013) ATEB Guide: COBS RDR Checklist

About the Author

Steve is an ATEB Director and has a deep understanding of all matter regulatory, built up over his 30 years + in the industry. With a training background and a technical brain, he overseas numerous complex projects and client implementation work.

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