RDR/FAMR Review – Firm Information Request

The Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR) are aimed at improving consumer outcomes from financial advice and guidance. The FCA is currently reviewing the impact of these initiatives on the market to date, and assessing how the market may develop, to ensure it meets consumer needs now and in the future.

The review includes the FCA surveying a selected sample of firms as part of its evaluation with two main purposes:

  • to evaluate the RDR and FAMR; and
  • to assess market trends and emerging risks within financial advice and guidance services.

The survey not only covers the operations and strategy of the retail arm of firms, but also encourages firms themselves to offer opinions on the future of the advisory market.  The FCA will also review data it already holds from firms’ reporting, and from FCA market studies and supervisory work.

The questionnaire is broken down into the following sections:

  • Your Firm
    number of advisers, paraplanners and trainee advisers in the firm, along with age and experience, starters and leavers and business affiliations;
  • Strategy
    range of business models active within the financial advice market, along with which sectors the firm is most active in and financial advice strategy;
  • Future Plans, Technology and Barriers
    barriers faced by the firm in developing new advice and guidance services, as well as the opportunities and challenges presented by emerging technology;
  • Retail Investments
    the current propositions for retail investment advice and guidance, including standard charging structures and sizes of pots typically advised on;
  • Protection and Later Life Advice
    the current propositions for advising on protection and later life products, including advice charging.

The FCA will provide updates on its work later this year and expect to publish a final report in early 2020.

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Our View

Many of the questions in the investment section relate to costs and charges, services provided and target markets.

We have previously highlighted the importance of firms identifying and understanding their target market. The PROD rules oblige firms to have formal, documentedd processes around target market and investment process. The FCA has made it clear that this will be a focus in its supervision of firms.

Firms should also pay attention to value for money when they make personal recommendations to consumers. There is a spotlight on fees and charges at all points in the advice chain and adviser firms should give serioius consideration to their charging structure ahead of any action by the regulator.

Meantime, firms need to be transparent about their pricing before they provide advice – FCA thematic work in the past couple of years has identified a high level of problems with firms’ disclosure documentation.

Action Required By You

We strongly recommend that firms complete the survey if selected to do so.

The deadline for submission of the survey is 1 October 2019.

About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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