
FSA issues Retail Distribution Review consultation paper
New proposals out from the UK regulator seek to rebuild trust in the retail investment market
The FSA hopes the changes, which will take effect from the end of 2012, will improve outcomes for savers and investors by enhancing the quality of advice they receive, and prepare both consumers and the industry for the future.
The authority is calling on all investment advisers to consider how they will adapt to these reforms. Although challenging, the RDR presents a significant opportunity for firms and individuals in the retail investment market to modernise practices, raise standards and improve the way they treat their customers.
In particular, the FSA is consulting on rules to provide greater clarity for consumers about the advice being offered and to redefine 'independence' - through distinguishing between 'independent advice' and 'restricted advice' (non-independent advice) services; and ensuring firms describing their advice as independent consider all products and providers that could meet a customer's needs (so consider all relevant options), free from any restrictions or bias, when making recommendations. It will also help to tackle the potential for adviser remuneration (commission) to bias advice - by requiring advisers to set their own charges in agreement with their clients ('adviser charging') before they identify suitable products for the customer; preventing product providers from offering pre-determined levels of commission and advisers recommending products that automatically pay them commission; and allowing the cost of advice to be taken from the product. It is also hoped the RDR will raise professional standards by requiring all investment advisers to be qualified to a new, higher level (equivalent to QCF - Qualifications and Credit Framework - Level 4), regarded as equivalent to the first year of a degree; introducing a code of ethics for advisers and enhancing standards for continuing professional development.
"The RDR is about regaining consumer trust and confidence in the retail investment market, building a more sustainable sector and making it easier for people to find their way around and get the help they need - this is more important now than ever before," says Jon Pain, FSA managing director of retail markets. "We have set out the specific changes we propose to make to implement our far-reaching package of measures. This is a call to action for the industry - all investment advisers need to consider how they will respond and implement these wide-ranging and challenging improvements by the 2012 deadline."
Comments are invited until October 30, 2009.
Click here for the CP
Click here for the feedback statement
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Bowman won’t commit to stress-testing the tariff shock
Nominated Fed vice-chair stonewalls calls to run ad hoc scenario similar to 2020 Covid test
Fed’s Bowman to ‘prioritise’ SLR exemption for US Treasuries
Reinstating Covid-era relief is a ‘no brainer’, dealers say, as bond markets reel from tariff chaos
SEC’s Peirce calls for rethink of international standards
Risk Live Boston: regulator rejects international calls for bank-like regulation of investors
Tariff turbulence piles pressure on banks’ VAR models
Backtesting breaches start to mount, but too early to tell if regulatory intervention needed
Trading desks want regulators to face down the NMRF monster
Rule-makers in Australia and the European Union are open to changes to the unpopular FRTB test
CFTC’s Doge-inspired drive to enforcement may fall short
Lawyers doubt guidance on rewards for self-reporting goes far enough
FRTB may bite harder for Europe’s CVA modellers
Farther reach of advanced approach and lighter load on total requirements mean limited takeaways from Canada and Japan’s implementation
Can Europe’s FRTB refurb bring banks back to Club IMA?
Softening the NMRF regime permanently might have the most impact, but the output floor still hurts