17 April 2012

FSA Linda Woodall: Getting ready for the Retail Distribution Review (RDR)

In her speech at the FT Intermediary Forum in London, Ms Woodall stressed that the FSA wants to see more people obtaining the appropriate qualification, and identifying in particular where gap-fill is needed, as this is one of the weaker areas.

How is the FSA helping to get firms ready?

"We are focused on constantly reviewing how you are implementing the RDR to ensure you have all the support you need in advance of 2013. We have conducted a number of surveys, which so far show a good picture of firms’ progress. For example, of firms that responded:

• 69 per cent of firms have developed and begun to implement a plan to be RDR compliant across all the requirements;
• 71 per cent of advisers are already qualified with an appropriate qualification, with a further 22 per cent studying for it; and
• 69 per cent of firms said they have begun to tell their clients, or have told all of their clients, about the changes arising from RDR. However, smaller firms are ahead, as only 36 per cent of larger firms have done so."

Recent Developments

"In February we confirmed our final position on the treatment of legacy assets. We engaged with the industry and listened to the feedback, which we believe has helped us arrive at a position that is workable. Here is what was decided:

• trail commission on advice given before the RDR rules come into effect can continue until the product matures or is terminated;
• post RDR, all advice will need to be paid through adviser charging and an ongoing service will have to be provided if there are ongoing charges;
• post RDR, if there is advice to ‘top-up’ an existing investment bought before the end of this year, the advice relating to the ‘top-up’ must be paid for by adviser charging, while the trail commission on the original investment can continue;
• advice on fund switches within a life product doesn’t end trail commission."

Professionalism

"To track how firms are getting on with the professionalism requirements, we followed up on a survey we did last year. The results tell us that compared to summer 2011:

• the proportion of advisers with an appropriate qualification has increased from 50 per cent to 71 per cent;
• 93 per cent of advisers are still on track with their prediction to complete the appropriate qualification in time; and
• gap-fill is one of the weaker areas; 67 per cent of advisers need gap-fill but, of these, to date only 39 per cent have completed it while 42 per cent are in the process of doing so and 19 per cent are yet to start.

It is important that advisers now press on and achieve an appropriate Level 4 RDR qualification and then obtain a Statement of Professional Standing (SPS).

We have approved eight accredited bodies to help with and verify the gap-fill and qualification requirements, and to issue the SPS. You can find the names of these bodies on the FSA website."

Full speech

© FSA - Financial Services Authority