Eleven months today sees the implementation of the Retail Distribution Review (RDR); a regulatory initiative designed to increase levels of professionalism in the retail financial services sector.
All financial advisers will need to meet a new, tougher set of regulations in time for this deadline.
There are three main changes taking place at the end of this year.
Firstly, all advisers will need to hold a minimum of a Level 4 qualification and also a Statement of Professional Standing (SPS) from a professional body.
Level 4 is equivalent to the first year of an undergraduate degree course. It is a more testing qualification level than the current mandatory minimum of a Certificate, and better reflects the technically complex world of financial services.
Advisers can only apply for a Statement of Professional Standing once they have obtained this Level 4 qualification and also completed a series of continuing professional development activities in order to fill any ‘gaps’ in their knowledge.
Here at Informed Choice, all nine of our Financial Planners hold a Level 4 qualification already (in fact, six of our Financial Planners hold one or more Level 6 qualifications) and all either hold or have applied for a Statement of Professional Standing.
Secondly, all advisers will need to work on the basis of ‘adviser charging’.
From the end of this year, the payment of commission from product providers to financial advisers is being abolished, with only a few exceptions for existing contracts and payments.
Here at Informed Choice, we have worked on this system of adviser charging since 2004, charging our clients an explicit fee for the advice, implementation and review services we provide.
Finally, from 31st December 2012 the services provided by financial advisers will need to be either ‘independent’ or ‘restricted’.
The threshold for providing independent financial advice will be slightly higher than it is currently, with any adviser who is not meeting this threshold only able to provide ‘restricted’ advice to their clients. This advice will be restricted in terms of the products they can recommend or the advice areas they are able to consider.
Here at Informed Choice, we continue to believe that independent financial advice represents the gold standard; it is what our clients deserve because it can result in the best outcomes, without undue commercial influences or restrictions.
With only eleven months to go until the implementation of these new regulations, we are pleased to report that we are ready and have been ready for some time.
Is your IFA ready yet for the Retail Distribution Review?
Those that have left it this late are potentially doing a disservice to their clients, as their focus for the remainder of this year will be on preparation for the new rules rather than delivering excellent service.
