The Financial Conduct Authority (FCA) has issued a ‘call for input’ about the Retail Distribution Review and a similar set of rules that in recent years shook up the UK financial advice market.
Technological change was one reason the financial watchdog gave for revisiting RDR – though an expert pointed to failings in the Financial Advice Market Review (FAMR), the other body of changes that the FCA is reviewing as part of the latest call for input.
The RDR was commissioned in 2006 by the FCA’s predecessor, the Financial Services Authority, and was designed to create a set of rules to make the retail investment sector work better for consumers.
It aimed to improve the transparency of payment structures and to eliminate “hidden” commission payments from fund promoters to platforms and financial advisers. The regime also specifies minimum qualifications that must be held by financial advisers.
FAMR was introduced in 2015 in response to concerns that the market for financial advice in the UK was not functioning well and sought for financial advice to become more accessible and affordable to all consumers throughout their lives.
Christopher Woolard, the FCA’s executive director of strategy and competition, said: “Consumers and the market are changing rapidly, as technology, employment patterns and inter-generational challenges change the way consumers interact with financial services. We want the market to deliver a range of good quality, affordable advice and guidance services that meet consumer needs.”
Steven Cameron, pensions director at Aegon, called on the FCA to look at the “advice and guidance gap”, such as in the defined benefit transfer market that has developed since ‘pension freedom’ rules.
“While Aegon research shows advisers continue to support FAMR principles, there has been disappointingly little practical change, and no real sign of the advice gap reducing. Recently, the FCA has been focused on developing protections for non-advised customers, including those exercising pension freedoms. While helpful, we believe the emphasis now needs to return to facilitating more people receiving advice.”
He also said a range of FAMR recommendations were designed to make advice more accessible through the workplace. However, employers “continue to struggle to understand what they can and can’t offer without crossing into regulated advice”.
The call for input closes June 3.
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