Regulation  

Advisers shrug off FCA probes, report ‘smooth’ transition

More than half of advisers are reporting a ‘smooth’ transition to the Retail Distribution Review world, with less than 10 per cent reporting major disruption to their businesses and close to a third citing opportunities for growth in the new world, according to Zurich’s new research.

Zurich’s research revealed that 53 per cent of 460 advisory firms have had either a ‘smooth’ or ‘very smooth’ transition to the RDR world, with only 9 per cent of advisers reporting “major disruption” to their businesses.

This is despite 40 per cent of those surveyed stating that they had been forced to change their customer charging structure “significantly”, with 20 per cent claiming this had involved a complete overhaul as they were not accepting fees directly.

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Around 29 per cent of advisers think the new regulatory environment present opportunities for growth.

The results come just a day after the findings of the latest post-RDR study conducted by the Financial Conduct Authority were published, with the regulator uncovering “disappointing” evidence that advisers are still soliticing and accepting “inappropriate” payments for distribution.

This is the second regulatory review to report RDR shortcomings, with the FCA having published the first of three thematic reviews in July that highlighted a number of issues in relation to charges and advice model disclosure.

In particular, the FCA warned that advisers must be “upfront” about whether they are independent or restricted before they give advice. The FCA also stated its disapproval that some advisers are providing charges in percentages, rather than cash terms.

The Zurich study found that despite these teething problems with compliance, advisers are confident that earlier elegaic predictions over the viability of financial advice post-2012 will prove unfounded.

Despite concerns being voiced across the industry that access to financial advice will tail off as a result of RDR and customer charging, 78 per cent believe their customers are either accepting, or very accepting of the new model. In addition, 71 per cent are confident that their customers will continue to use their expertise for financial advice and planning in the future.

This confidence is also reflected in the responses to questions about the financial impact of the RDR, where 36 per cent of advisers surveyed do not believe it has had a negative impact on overall revenue so far.

However, 69 per cent think levels of regulatory costs on advisers are too high and do not reflect the risk an advisory business poses to consumers, with only a quarter seeing the costs as fair and proportionate.

Richard Howells, intermediary sales director for Zurich UK Life, said: “As business models and income streams are shifting – advisers are having to embrace new ways of doing business. It comes as no surprise to me that many are rising to the challenge – with nearly a third seeing the RDR as presenting new business opportunities.”