What was the Retail Distribution Review (RDR)?
The RDR rules are a key part of the FCA’s consumer protection strategy to give people confidence and trust in firms they use for financial planning.The RDR aims to ensure that consumers:
- Know how much advice costs
- Know what they are paying for
- Get improved professional standards from investment advisers.
Since December 2012, three key changes introduced by RDR are:
Commission
This is no longer a remuneration method.
- Fees must be agreed with customers before providing any services.
- The removal of commission means that advisers will no longer be influenced into selecting a product according to how much commission they can earn.
Qualifications
- Advisers must be qualified at Level 4 or above in the national qualification framework. This is about the same as completing the first year of a university degree.
- Advisers must obtain an Annual Statement of Professional Standing (SPS) and keep knowledge up to date through continual professional development.
Clarity
- Advisers must make it clear whether the advice offered is independent or restricted.
