What is the Retail Distribution Review (RDR)
1st January 2013
The implementation of the Retail Distribution Review (RDR) is one of the biggest overhauls of financial regulation since the Financial Services Act of 1986. The aim is to improve service levels and transparency in financial advice and ensure the interests of financial advisers and their clients are in line. It is, in other words, all about improving the service you as a client receive.
* Knowing the cost of advice: From the beginning of 2013, the Financial Conduct Authority (FCA), the industry regulator, intends to improve the way you receive financial advice. Financial advice has never been free but the introduction of the RDR means all advisers must make clear in advance the cost of their advice and how it will be paid for and there will no longer be the option of paying commission on new investments. This transparency will enable clients to know exactly what they are paying and that any advice received is not influenced by how much commission an adviser could earn from the advice they give.
P W White & Partners Ltd. have always been transparent in the charges they make and have never been influenced by commission.
* Knowing what you are paying for: Financial advisers have always been able to offer broad-ranging or more product-specific advice but, through RDR, they will have to make it clear which products they can advise you on and whether they can consider any product provider across the market or only certain ones. This is the difference between ‘independent’ and ‘restricted’ advice.
‘Independent’ has always been a description that could only be used by those advisers who researched the whole market. Under RDR, the definition of ‘whole of market’ has expanded and will also cover some more esoteric asset classes. An ‘independent’ adviser must demonstrate they have considered all of these products in the process of addressing your financial requirements. If an adviser cannot meet the definition of independence, they will be deemed to be ‘restricted’ and will use a smaller range of investments.
P W White & Partners Ltd. are proud to be independent.
* Enjoying even better service: Under the new rules, the FCA now requires all financial advisers in the UK – ‘independent’ and ‘restricted’ – to achieve a higher minimum standard of qualification before they may provide advice. This means an increase in the basic level of knowledge and should naturally lead to a higher level of professionalism for the industry as a whole. The FCA will monitor adviser firms to make sure they meet these new standards and advisers will also have to sign an agreement to treat all clients fairly.
All advisers at P W White & Partners Ltd. were already qualified to the higher minimum standard of qualifications even before the new proposals were made.