RDR will increase overall cost of advice, providers warn

The survey, conducted by management consultants Winchester White among a number of major providers including Lloyds Banking Group, Aegon, HBoS, Prudential, Schroders and Skandia, found that 57 per cent believe product charges will be the area most affected by the RDR.

Meanwhile, a further 64 per cent of respondents said that the overall cost of advice will rise as a result.

The report read: "The most significant impact of the RDR is likely to be on the charging, commission and pricing structures in place."

And although guided sales has been put forward as a solution to providing financial products to the mass market at a lower cost, over 60 per cent of respondents expressed some reservations about the model's likely success.

Similarly, responses were mixed as to whether companies would actually launch a guided proposition.

Over a quarter (28 per cent) of respondents said that it was too early to say, another 28 per cent stating it was unlikely and only 25 per cent said it was likely they would implement guided sales.

When questioned about what success the concept of guided sales would have in meeting the potential gap in the advice space if IFAs predominantly target high net worth clients after the implementation of the RDR, a resounding 60.7 of those surveyed said that it would have limited success.

Meanwhile, nearly 70 per cent of respondents said that quality advice is ultimately more important to the consumer than 'independent' advice or access to it.

However, it is not all negative for the RDR, with the research reaffirming that current regulations for the financial services industry in the UK are in dire need of a shake up, with 92 per cent of the respondents agreeing with the statement that 'our industry requires a review of current regulations'.

Furthermore, over 71 per cent of respondents think that the RDR proposals will deliver some benefit to the industry.

Kevin Paterson, managing director at Winchester White, said: "I am confident we will be a better regulated industry for the RDR, delivering better protection, better products and better services in a cost effective manner."

However, the Financial Services Authority (FSA) still have some work to do in order to provide more clarification in certain areas.

Paterson added: "The FSA must challenge itself to provide more clarity on key elements such as qualification requirements, costs and implementation approach in a timely fashion. Anything less will lead to confusion delivering a knock on impact on the customer."

Of the different sectors affected by the new proposals, bancassurers (39 per cent) and consumers (35 per cent) were cited as being the main winners from the RDR, while only a quarter (25 per cent) thought that IFAs, sales advisors or product providers would be the main beneficiaries from the proposals.