Retail Redistribution Review (2012)
The 2012 Retail Redistribution Review (RDR) was an overhaul of the regulation around how financial advice and financial services companies in the UK engage with consumers, and how consumers pay for the services provided. RDR was carried out by the Financial Services Authority (FSA) and saw several significant changes for the industry put in place, including the banning of commission-based financial advice. The rules came into force on the 31st December 2012.
Key aspects
RDR saw the implementation of several key new rules:
- advisory firms were to explicitly disclose and separately charge clients for their services
- advisory firms were to clearly describe their services as either independent or restricted
- and individual advisers were to adhere to consistent professional standards, including a code of ethics.[1]
The rules were designed to make the cost of advice more transparent and to help consumers have a better understanding of what kind of service they are being offered. [2]
Industry Reaction
The reaction from figures in the industry was mixed. Some claimed it would be the end of 'free' financial advice. [3] However, many hailed it as a significant step to end the mis-selling of financial advice.[4]
Prior to the regulations coming into force it was reported that a fifth of advisers were 'about to quit'.[5] However, less than a year after the review it was revealed that the number of advisers operating in the UK had actually risen by 6%. [6]
As of 2022 there were 5014 registered financial adviser firms in operation in the UK.[7] As of 2022, there were 43,326 advisers either working for certified firms or authorised to provide advice by the Financial Conduct Authority (FCA). Just 6% of advisers are under the age of 30, leading to speculation that this would harm the ability of younger people in the UK to receive financial advice.[8]
References
- ↑ "How changes to independent financial advice affect you". BBC News. 2011-06-21. Retrieved 2023-09-26.
- ↑ Osborne, Hilary (2012-08-11). "End of line for 'free' financial advice". The Observer. ISSN 0029-7712. Retrieved 2023-09-26.
- ↑ Osborne, Hilary (2012-08-11). "End of line for 'free' financial advice". The Observer. ISSN 0029-7712. Retrieved 2023-09-26.
- ↑ Glasspool, Jamie (2022-09-28). "RDR, ten years on - IFA Magazine". ifamagazine.com. Retrieved 2023-09-26.
- ↑ Atherton, Mark (2023-09-26). "A fifth of advisers about to quit". The Times. ISSN 0140-0460. Retrieved 2023-09-26.
- ↑ "Adviser numbers rise following RDR". Financial Times. 2013-08-16. Retrieved 2023-09-26.
- ↑ "Number of financial advisers UK 2022". Statista. Retrieved 2023-09-26.
- ↑ Hinchliffe, Ruby (April 4, 2022). "Only 6% of advisers are under 30 years old". FT Adviser. Retrieved 26 September 2023.
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