The FCA has confirmed it has been in talks with its US counterpart, the Financial Industry Regulatory Authority, about its experience in implementing RDR reforms.
A spokesman for the FCA said that it had been speaking with Finra, as well as other bodies in the US, as part of its ongoing dialogue with US regulatory bodies.
Although the spokesman could not give details of the talks, she confirmed the US regulators were speaking to the FCA with a view to learning from the UK’s experience of implementing the RDR reforms, which included a ban on commission on investment advice and introducing a minimum level of adviser qualification.
In 2010, the then City regulator, the FSA, and Finra entered into a memorandum of understanding to support more robust co-operation between the two regulators.
Finra was asked for comment but a spokesman said it was unable to comment “on this occasion”.
As early as February 2011, the US Securities and Exchange Commission proposed imposing the same fiduciary duty to clients on broker dealers that is required of investment advisers.
Australia and Canada have both explored the possibility of adopting some of the RDR principles, while in February 2014, the Isle of Man brought in a form of RDR.
Last year, industry stalwart Garry Heath, author of the Heath Report and former founder of the IFA Association – the precursor to Apfa – undertook a roadshow in Canada warning of some of the dangers of RDR, such as the lack of advisers servicing the mass affluent market.
He said he was not surprised that Finra was discussing the merits of RDR with the FCA, adding: “All the regulators speak frequently, but if RDR has been a disaster in one country, why export it?
“RDR came from Australia, which is moving away from it; we have it but do not want it; Canada was moving towards it but has lost enthusiasm. Plus, I am not sure how RDR would work in the US.
“Most advisers are registered in their local state, so I do not know how Finra would implement it as it might have to introduce RDR individually in each and every state.”
Chris Hannant (pictured), director general of Apfa, said: “The US is not the first country to have an interest in introducing a form of commission ban, one of the main features of RDR.
“The principal lessons from the UK is the huge exit of IFAs when RDR was introduced in the UK, and the liability attached to advice, which puts huge pressure on adviser businesses. So caution is key, to not upset the flow of financial advice.”
Mr Hannant added that, in his opinion, a big problem for the UK post-RDR is the liability attached to advice, which puts huge pressure on adviser businesses.
Adviser View
Alex Reynolds, financial adviser at London-based Advies Private Clients, said: “We have gone through the pain, and still are, so it would make sense. I’m sure Finra has spoken also to Australia. Some US firms have already made the move expecting some form of RDR to come in, and have moved to a fee-only propositions.
“So it makes sense to look at the UK to see what we have done right and what has been done wrong.”
