There is still widespread non-compliance with the Retail Distribution Review rules, the Financial Services Consumer Panel has revealed.
In the Financial Services Consumer Panel’s annual report, the watchdog revealed it believes most firms have not really embraced the idea of treating customers fairly, yet alone the Retail Distribution Review requirements.
The report stated there was “continuing low levels of compliance with the RDR”.
When it reviewed the impact of the RDR, the FCA found that the vast majority of investment advisory firms it assessed were non-compliant in some respect, with a significant proportion having multiple failings.
Many problems are identical to those identified by the FCA last year, the panel noted, despite it having issued extensive guidance in the meantime.
In light of this, the panel revealed it is now urging the FCA to consider the effectiveness of its regulatory tools and, in particular, how it deals with persistent non-compliance.
The report concluded “this will be all the more important in light of the Budget changes.”
Sue Lewis, chairman of the panel, said: “There is still widespread non-compliance with RDR rules. ‘Non-advice’ continues to pose a risk for consumers, and it will be vitally important to get the ‘at retirement’ guidance promised in the Budget right.
“The greater freedom for people to choose what to do with their pension pots will also pose risks as new products come on to the market.
“We will be urging the FCA to be vigilant, especially to protect those who retire in the gap between the Budget and April 2015. The problem of perverse incentives has not gone away and the FCA needs to keep on top of this.”
The panel also revealed it is watching the implementation of the new mortgage borrowing rules, especially the risk to ‘mortgage prisoners’ trapped in poor value deals and argued advice and guidance remain “a concern.”
