Advisers: RDR education burden should fall on FSA and gov’t
Study shows that 80 per cent of advisers believe the public has no knowledge of the RDR.
The general public is unaware of the Retail Distribution Review and does not understand the implications it will have on financial advice, advisers believe.
According to survey results from Defaqto, four out of five advisers believe the general public knows nothing at all about the RDR, while approximately the same percentage believe publicity led by the Financial Services Authority or government would help them educate clients.
Fraser Donaldson, insight analyst for funds at Defaqto, said: “While the RDR is going to have a significant impact on advisory firms and their appointed representatives, the need to undergo a change in business model and service proposition, along with a fundamental change the way advisers are remunerated, is also likely to have a major impact on clients.
“It would be sensible for advisers to start communicating with their clients as soon as possible so that they get used to the forthcoming changes.
“With something as fundamental as adviser charging, some market research with clients on preferred payment methods and level of payment they are likely to accept may be advisable, as a sudden change in charges could cause additional problems.”
Mr Donaldson added that while it is the FSA’s job to inform consumers broadly that the RDR is approaching, it is up to advisers to explain how the change will affect each individual client specifically.
At the beginning of April the FSA released a two-page document on the RDR aimed at consumers, which included a four-point checklist informing clients of the qualifications that advisers should have.
The document, which the regulator said would be sent to trade and consumer groups, also provided a broad overview of the different advice categories that will exist post-2012 and the move away from fees.
A freedom of information request by FTAdviser sister title Financial Adviser in 2011 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.”