The Retail Distribution Review is one of the most important regulatory developments for many years. It is prompting both financial advisers and providers to rethink the financial landscape from the point of view of the end consumer.
The Retail Distribution Review, which is also known as the RDR, is part of the FSA’s agenda to close the savings gap by giving consumers greater confidence and trust in the products they hold, and the advice they take.
Key dates for the introduction of the Retail Distribution Review
The new framework's two key milestones provide a golden opportunity to build long-term relationships focused on investment and tax solutions rather than on selling products. These two dates are known as R1-Day and R2-Day.
The first of these is 31 December 2012 which sees the main framework, which includes a new charging method for advice, put in place. The new charging rules, known as Adviser Charging, mean that customers will now pay for advice with pre-agreed fees for all new investments and existing investments that are changed in certain ways.
A year later, on 31 December 2013 (or possibly some time in 2014), further RDR rules will mean changes to the way that investments are handled, as the reinvestment of fund manager rebates will be mandatory in units rather than in cash.
At Skandia, we've been preparing for these changes for some time and are compliant with the new RDR framework ahead of both required deadlines, as of 18 December 2012, including the introduction of unbundled charging onto our platform.
The benefits of the Retail Distribution Review
We believe the Retail Distribution Review will make for a thriving advice sector, serving customers with valuable, essential and professional advice.
Although financial advisers will, in the short term, need to make business changes to adapt to the new rules, over the long term a real opportunity is created to demonstrate the true value of ongoing financial advice and to differentiate professional services from one-off investing.
To help advisers adapt their businesses to RDR, and beyond, we've created a dedicated online RDR Support Centre.