RDR awareness funding absent from budgets

Derek Bradley, chief executive of advisory portal PanaceaIFA, said the latest budgets from the FSA and the Money Advice Service had provided little indication of funding support for telling consumers of the regulatory changes, despite comments from the City watchdog last year that indicated the FSA would set money aside for this.

With less than a year until the RDR is implemented, Mr Bradley said: “It is difficult to know who is picking up responsibility for raising awareness.

“I get the impression that the FSA is expecting the industry to pick up the cost of doing it. It is the regulator’s responsibility.”

Mr Bradley said there was a need to run a campaign similar to the digital television switchover. He said: “All that exists at the moment is one page on the FSA website, which was last updated in October 2011.

“With consumer attention being diverted easily by domestic economic matters, the Queen’s diamond jubilee and the Olympics, the FSA has little time to act.”

He highlighted the findings of a PanaceaIFA survey published last month, which showed 93.5 per cent of clients did not understand what the RDR was.

Philip Martin, proposition and marketing director for Openwork, agreed the need for awareness was paramount, and said if the FSA did not run a campaign, the Association of IFAs should.

He said: “Openwork advisers can help with education. We could develop a brochure that would articulate the advice model. Openwork would be happy to engage in wider industry discussion on consumer awareness.”

However, Chris Hannant, policy director of Aifa, said the FSA should follow through on its pledges to promote awareness of the RDR.

He said: “Making it clear to consumers what is happening will be key to the RDR bedding down successfully. The FSA has pledged to help raise consumer awareness of the regulatory changes, but to do so closer to the implementation date. It is essential that the FSA follows through on this promise.”

The FSA’s annual funding requirement for 2012/2013 was £578.4m. It said this would go towards IT services, staffing and regulatory restructuring.

The Money Advice Service announced its budget for the year was £46.3m. It said this would be spent on funding face-to-face debt advice, advice in Scotland and Northern Ireland and developing better ways of delivering support.

A spokesman for the Money Advice Service said: “The RDR is in our sights. We will be doing activity on it.”

She could not divulge the timeframe or how much money was being allocated to it.

Last year, a Freedom of Information request asked how much money the FSA planned to spend on consumer awareness of the RDR and the changes it will bring.

In its response, the City watchdog said this was not a separate workstream and no individual figures were held. The FSA said it would fall under the communications division.

In response to a query on how consumers would be informed of the changes, it said: “We will be considering this as a part of business as usual in the communications division in the lead up to the implementation of RDR in 2013.”