The Financial Services Authority (FSA) response to the Treasury Committee makes it clear that implementation of the Retail Distribution Review (RDR) remains on track for the end of next year.
The Treasury Committee remain unhappy that the FSA so quickly responded to their report, with an embargoed response rejecting their suggestion for a one year delay.
In their full response today, the FSA makes it clear that they are rejecting this request for a one year delay, with the Retail Distribution Review still being fully implemented on 1st January 2013.
There are a couple of concessions from the FSA in their reply.
The FSA is going to consider flexibility on a case-by-case basis for financial advisers who cannot meet the new professionalism requirements due to personal reasons. They are also planning to consult on further work-based assessments for those who do not want to sit an examination.
Perhaps the most important number in this report is from the FSA who found that 91% of financial advisers expect to have reached the new higher professionalism standards by the end of next year.
The Treasury is concerned that higher qualification requirements will result in the widespread loss of financial advisers from the UK market. These new figures suggest this will not be the case, with less than 10% likely to depart.
The Retail Distribution Review means that all financial advisers will need to hold a higher minimum qualification, at QCF Level 4. They will also have to obtain an annually renewable Statement of Professional Standing (SPS) which will ensure relevant Continuing Professional Development is completed.
The FSA response to the Treasury Committee makes it clear that there are no plans (currently) for a further move to Level 6, the equivalent of Chartered Financial Planner status. However, we do feel this is inevitable over longer term.
In addition to these new professional standards, the payment of commission by product providers is being abolished and there will be a clearer distinction between ‘independent’ and ‘restricted’ advice.
Whilst the rejection of a one-year delay to the RDR is unlikely to please the 9% of financial advisers who are not on course to meet the new standards, it was the only likely outcome from this process.
The FSA has remained committed to the RDR deadline from outset and it has given more than enough time for advisers to prepare for the regulatory changes.
One issue raised in the Treasury Committee report is likely to change the relationship between the regulator and government in the future. They call for greater accountability from the regulator, having realised that MPs are essentially powerless to change FSA policy due to the legal structure of the UK regulator.
Here at Informed Choice, we welcome the improvement in standards that will come about as a result of the Retail Distribution Review and we are pleased that implementation of this initiative is proceeding as expected.
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