19 July 2011

CII response to Treasury Select Committee report on Retail Distribution Review

David Thomson, director of policy and public affairs at the Chartered Insurance Institute (CII) commented on the Treasury Select Committee's (TSC) report on the retail distribution review (RDR) published on 16 July 2011.

“We welcome the TSC’s support for higher qualifications as a core part of the RDR. The key concern now is to complete the RDR process and ensure that there is a consumer campaign in place to outline the benefits to the public as soon as practicable – at the moment less than one in five are aware of the RDR. This will give certainty to both the public and the financial advice community alike.

“It is worth remembering that the original aim of the RDR, instigated five years ago, is to restore public confidence in the retail investment market and associated financial advice. It’s clear that if we want to encourage a savings and investment culture in the UK, then public confidence in financial advice and services is crucial.

“Currently an estimated 70 per cent of the public do not use professional financial advice of any sort, and our own research shows that the UK has an estimated £9 trillion retirement and long term care savings gap.

“The imperative to regain public trust in our sector has never been greater. We know two thirds of consumers expect people offering financial advice to have a professional qualification equivalent to a full degree status or higher. So the move to higher levels of qualification is a key step in rebuilding the public’s trust in our sector.

“For the advisory community, further delay will serve to increase uncertainty and even undermine the positive momentum that has already built behind the RDR. The vast majority of our members have made great strides towards meeting the qualification challenges presented by the review.

“We believe the public is hungry for a financial advice sector that has earned parity of esteem with other professions. Recent CII research into financial capability suggests that 33 per cent of those who do not currently take financial advice (approximately 11 million people) would consider doing so, once the RDR changes were explained to them.”

Press release

© CII