The FCA has released its annual report including, hidden among the numbers, an increase in the cost of the RDR.
The annual report, which covers the first full year in operation for the year ended 31 March 2014, shows the regulator has spent £3.3m on the RDR in the past 12 months alone. This, combined with the previous year - the 12 months to 31 March 2013 which saw £2.4m - means the FCA has spent at least £5.7m on the RDR.
The FCA attributed the latest costs to three new “phases” of a review into looking at how firms are meeting the requirements of the RDR. The regulator said, “We have focused on how firms are disclosing their service and charging structure to clients, and whether firms that describe themselves as independent are actually offering an independent service in practice.”
This has come a few months after the FCA said it has seen “disappointing” results and suggested firms are not being clear enough on how much their advice will cost clients.
The next thematic review, which is expected to be focused on disclosure, is due this year. But so far, 73 per cent of firms failed to provide have information on the cost of advice and the scope of their service.
David Hardman, director at Ludlow Wealth Management, said that in relation to his firm, he has not spent a great deal of money on the RDR. “If anything it has been minimal and the subsequent impact of the RDR on our business has been limited. We knew it was coming so like any well-run business we planned for it and ensured we’d be ready for the date.
“If anything the RDR helped us focus our minds on the direction of the business and we opted to take the restricted route as opposed to be independent.”
Mr Hardman added he has seen no disadvantage to his business being restricted. “In many instances it was felt that the issue of being independent was in the minds of our advisers and not our client.”
“I appreciate for other firms the RDR had a significant cost impact. For those that weren’t running an efficient business, it has sounded the death knell. For us there’s been no major issue. It has been business as usual,” he added.
The annual report had also stated advisers have paid out £11.8m to clients as part of the regulator’s Arch Cru consumer redress scheme. Advisers had to identify cases in which they may have mis-sold Arch Cru funds and to make the redress payments where appropriate.
The FCA added it has imposed 46 fines over the year to 31 March, which included five public censures and 26 prohibitions, totalling £425m.
