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.”