The chairman of the Treasury Select Committee, Andrew Tyrie MP, has suggested that it would be at least 2015 before his committee conducts a comprehensive assessment of the impact of the Retail Distribution Review (RDR). He suggested that this was necessary in order to allow the full impact of the changes to become apparent.
RDR came into force at the start of 2013 and imposed new requirements on financial advisers, such as the need to attain additional qualifications, a ban on receiving commission and new requirements to be regarded as an independent adviser. The Select Committee had previously recommended that the project was delayed, and that experienced advisers could be exempted from the examination requirements, but to no avail.
“The RDR has only been going for about a year, and it will take at least two years for the full impact of the changes to work through the profession. And in any case, the FCA is carrying out its thematic review of the RDR and I think we need to see that,” said Mr Tyrie.
Speaking at the annual dinner of the financial advisers’ trade association, the Association of Professional Financial Advisers, he called for the Financial Conduct Authority (FCA) to focus less on data collection, and to make more use of judgement when assessing risk. Advisers are also likely to welcome his call for a freeze on regulatory authorisation fees.
Mr Tyrie also expressed concern that RDR has created an ‘advice gap’, where mass market customers are no longer offered advice because it would not be profitable for the adviser to do so. Many high street banks no longer offer face-to-face financial advice, and some advisers have set a minimum income or minimum level of assets that clients must have in order to receive advice. According to FCA data, the number of registered advisers fell from 35,073 in summer 2012 to 31,132 by the end of the year, before recovering to 32,690 by July 2013.
Two months earlier, when addressing a Centre for Policy Studies fringe event at the Conservative Party conference, he made some more outspoken remarks on the same subjects. On the issue of firms pulling out of giving advice, he said: “[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][RDR] is having the unfortunate consequence of consolidating the industry into a smaller number of large players which can be damaging for competition and needs to be watched very carefully.” On the subject of data collection, he said: “Anybody who works in a bank or regulated firm will tell you that [regulators] come in and demand heaps of material. God knows what they do with it, it costs a packet and the client cost is huge but what is the point in it all?”[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]