The Retail Distribution Review (RDR) was set up with the aim to improve clarity for people who are looking to invest, raise the professional standards of advisers and reduce the conflict of interest which is found in remuneration for adviser services. 

The key proposals of the RDR are:

Raise professional standards - through requiring all investment advisers to be qualified to a new, higher level, introducing a code of ethics for advisers and enhancing standards for continuing professional development.  These new standards will be maintained and enforced through the creation of a Professional Standards Board, which will be implemented by making greater use of FSA’s exisinting powers in the Financial Services and Markets Act (2000).

Factsheet – Professionalism [PDF]

Provide greater clarity for consumers through distinguishing between 'independent advice' and 'restricted advice' (non-independent advice) services; and ensuring that firms describing their advice as independent consider all products and providers that could meet a customer’s needs (so consider all relevant options), free from any restrictions or bias, when making recommendations.

Factsheet - Independent advice [PDF]

Tackle the potential for adviser remuneration (commission) to bias advice - by requiring advisers to set their own charges in agreement with their clients ('adviser charging') before they identify suitable products for the customer; preventing product providers from offering pre-determined levels of commission and advisers recommending products which automatically pay them commission; and allowing the cost of advice to be taken from the product

Factsheet - Adviser charging [PDF]

Group Personal Pensions (GPP)
We are removing commission bias from the group personal pension market - recommendations made by advisers will not be influenced by product providers.

Our rules will also make adviser charging more transparent - advisers will have to fully disclose how they will be remunerated and employers will negotiate and agree the cost of the adviser’s services upfront.  We believe that employers would be more engaged with the level of adviser remuneration if they were given transparent information on the overall amount an adviser will receive on the GPP as a whole.

Pure Protection
We have published proposals in CP10/8 and are asking for views on the following:

• a requirement that investment firms explain how they are remunerated for pure protection advice or sales associated with investment advice and disclose the amount of commission if the customer then purchases a pure protection product; and
• amending our rules to allow firms who elect to sell pure protection under COBS rather than ICOBS to continue to do so after RDR implementation without having to apply the rules on Adviser Charging to their pure protection sales.

We also give an update on our thinking on reading-across RDR 'independent' and 'restricted' labels. 

Platforms
We have issued a Discussion Paper (DP10/2) which seeks views on options for changes to our regulation of platforms, to support the RDR objective of reducing bias in the advised sales process. It covers a range of issues that we would like your feedback on. Through the RDR and platforms we want to achieve four key outcomes.  They are:

• platforms services that do not undermine the objectives of the RDR, especially adviser charging;
• platforms do not provide incentives to advisers which lead to customers incurring additional costs from the unnecessary switching of investments onto or between platforms;
• no consumer detriment is incurred from the ways that platforms are remunerated, for example, incentives which may restrict choice; and
• customers are provided with a clear description of the platform charges and what services they will receive. 

More Information

Frequently asked questions - RDR