Retail Distribution Review (RDR)
Legislation to take effect on 1st January 2013 will introduce new governance on the way in which financial advice is given in the UK. Increasing media attention is being given to this area.
The essentials are as follows: -
- At present, a Financial Adviser must hold certain minimum qualifications. Post RDR, all Financial Advisers will have to qualify to a much higher standard. If an adviser is unable to pass the necessary examinations to achieve this standard by the end of 2012 then he/she will no longer be able to give financial advice.
- At present, someone receiving Independent Financial Advice will pay for that advice either by commission or by paying a fee (or by a combination of both).
- After January 2013, all financial advice given by Independent Financial Advisers must be on an agreed fee basis only, to give the greater transparency required by the Regulator.
- Even though RDR approved financial advice must be paid for by separately identified fees, the person receiving the advice can still ask for the fees to be paid by the insurance company/investment house, by a product deduction, rather than having to pay the fee personally.
- The new requirements on fees will also apply to new company pension arrangements, however, those already established prior to 1st January 2013, may continue on the existing basis.
Morgans Ltd have already fully integrated the requirements of RDR into our advice process and please contact us if you would find it helpful to have a discussion about this in greater depth.