07 September 2012

Treasury Committee publishes letter from Martin Wheatley on Retail Distribution Review

The Treasury Committee has promised to monitor the benefits to consumers of changes introduced as a result of the RDR, after the FSA again said it would be sticking to its year-end implementation deadline.

The Treasury Committee has published correspondence between the Chairman of the Committee, Andrew Tyrie MP, and Managing Director of the FSA, Martin Wheatley, regarding the FSA’s Retail Distribution Review (RDR).

Chairman Andrew Tyrie's commented:

The FSA’s Retail Distribution Review (RDR) will radically reform the provision of financial advice in the UK. Its introduction has placed a heavy burden on practitioners large and small, with an attendant risk for consumers.

To minimise the risk that consumers lose out during the transition, and to maintain choice and competition in the advice market, the Treasury Committee called for the implementation of the new rules to be delayed by 12 months.

The Committee was disappointed that the FSA rejected this recommendation. We also deprecated the speed with which that decision was made.

The banning of commission and the introduction of a clear market price will be carefully monitored by the Treasury Committee in an effort to ensure that the expected benefits flow to consumers.The Committee welcomes the FSA’s assurance that four alternative assessments are now available for those who prefer not to sit formal examinations. This will provide greater opportunities for compliance.As the deadline approaches, it is important that the FSA redoubles its efforts to inform the public of the changes and to increase the levels of industry compliance. The publication last week of a new, FSA guide to financial advice is a step forward.

Wheatley, in response, said the regulator was satisfied with advisers' progress towards meeting the RDR requirements and would, therefore, be sticking to its existing 31 December 2012 deadline.

Highlighting its most recent progress report, conducted in the spring, Wheatley said 93 per cent of advisers stated they were on track to meet the RDR's professionalism requirements in time. 21 firms had withdrawn requests for a year-long extension to the RDR's professionalism rules, because they did not meet the necessary criteria. It had, as of 3 August, granted 18 waivers, most commonly on the grounds of ill health of an adviser or relative.

• Press release
• Letter from Andrew Tyrie MP to Martin Wheatley
• Reply from Martin Wheatley

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