The Treasury Select Committee has called for written evidence about the changes to the regulation of independent financial advisers.
In particular, they are keen to receive evidence about how the Retail Distribution Review (RDR) will achieve three main outcomes:
1 – a transparent and fairer charging system
2 – a better qualification framework for advisers
3 – greater clarity around the type of advice being offered
Here at Informed Choice, we believe that the RDR will achieve these stated outcomes for consumers.
The removal of commission for the sale of financial products and the introduction of Adviser Charging will result in a transparent and fairer charging system for investors. Adviser Charging means that investors will have to be told by their financial adviser how much they will pay for different types of activity.
It is an enhanced version of the current form of commission disclosure, with the financial adviser and investor agreeing charges before services are delivered.
Raising minimum qualification standards to the equivalent of QCF Level 4 will result in a better qualification framework for advisers. More importantly, it will result in a better qualification framework for consumers, who can be confident that their adviser has proven their technical competence by passing a more robust professional examination or assessment.
The new distinction between ‘independent’ and ‘restricted’ advice, when combined with the new adviser charging rules, will result in greater clarity around the type of advice being offered.
Because all financial advisers, including bank advisers, will need to operate on the same remuneration basis and hold the same minimum qualification standards, there will be a level playing field and it will be easier for consumers to differentiate between independent and non-independent financial advisers in the future.
The rule changes remain on course to be fully implemented on 1st January 2013.
The involvement of MPs, who will be debating the regulation of financial advisers again next week on 29th November, and the Treasury Select Committee appears to have come about largely due to the resistance of the changes by a small group of IFAs who want to maintain the current status quo.
These change resisters have left it incredibly late in the process to kick up a fuss about changes that will improve outcomes for the majority of investors and ensure that those offering financial advice in the future are properly qualified, operate on a transparent remuneration basis and describe their services accurately.
Photo credit: Flickr/mia3mom
