Current Issues

Whatever will be will be ……………..

It is five and a half years since the RDR was launched and nine months before implementation. Both providers and distributors are unsure and to some extent unprepared for this. Indeed, the FSA has an implementation team of only four. In a matter of months the FCA will emerge from the FSA’s ashes, yet:

• At the end of March, Tony Hanlon, manager of The Financial Services Authority’s asset management sector team, said the regulator had three main areas of concern: the taxonomy of ETFs, potential conflicts of interest and operational risks. ETFs were the very security that the regulator quoted as an example of what an IFA should consider in the post-RDR world

• The Financial Services Authority is considering banning unregulated collective investment schemes, which it has nicknamed ‘sex and violence’ due to their risky nature, according to lawyer and compliance consultant Adam Samuel (April 2012, Citywire)

• On April 4, The Financial Services Authority published GC 12/6, which shows the findings from a thematic review on centralised investment propositions. Apparently the findings cause concern and there is cast doubt about the many model portfolio and DFM solutions deemed to be the logical outcome of the RDR

• The major issue of platforms, absolutely key to advisers for post-RDR remuneration, is still in the air as we await the fourth paper to be implemented after RDR.

There has been clarification of the issue of trail commission but confusion still exists and providers lack systems to deliver appropriate solutions. A sunset clause, proposed by some in the industry, could inflict mortal wounds on some distributors.

Many advisers have focused time and energy on qualifications whilst ignoring their customer proposition. We can assume from our research that the majority of IFA clients have not yet seen let alone agreed an RDR compliant fee agreement.

On the positive side, the RDR has already resulted in a far greater level of qualification of advisers. It has driven the sector away from its cottage industry roots towards a state where business principles and professionalism prevail.

Who will be the winners, IFAs, up-market restricted wealth managers, consolidators or networks? Perhaps SJP will be the model for tomorrow or is it D2C?

Place your bets!

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