New research from YouGov has found that only one in twenty investors are knowledgeable about the upcoming regulatory changes being introduced to financial services as a result of the Retail Distribution Review (RDR).
The YouGov survey was conducted with 1,000 people who currently use the services of an IFA.
According to this research, very few IFAs are telling their clients about the new rules and regulations being introduced at the end of next year.
From 31st December 2012, all financial advisers (independent and tied) will be subject to stricter regulations in respect of professional standards and charging.
On professional standards, financial advisers will need to hold a minimum qualification level equivalent to the first year of a degree course. They will also need to obtain an annually renewable Statement of Professional Standing (SPS) from an accredited professional body.
The start of 2013 will also see the abolition of commission funded from product charges. This method of remuneration for financial advisers will be replaced with ‘adviser charging’, where the investor and adviser agree the payment which can be deducted from an investment product before any advice is provided.
There will also be clearer distinctions between the type of advice service on offer, with ‘independent’ or ‘restricted’ advice available to investors.
Here at Informed Choice, we have been advocates of these new standards since the original consultation process was launched by the FSA. We believe this combination of higher professional standards, more transparent adviser remuneration and clearer disclosure of independence will all benefit investors who seek advice.
Our briefing note from June 2011 describing the Retail Distribution Review in greater detail is available to download from the resources section of our website.
We hope that, as the implementation of these new regulations draw ever closer, more IFAs will choose to tell their clients what the new rules involve. Hopefully at this stage other firms will also be happy to report on their progress towards meeting the new requirements.
Photo credit: Flickr/Oberazzi
