Background to the RDR and the Professionalism Working Group
What is the Retail Distribution Review (RDR)?
The Financial Services Authority (FSA) launched its retail review in June 2006. The review targets the quality and standard of advice available to consumers in the financial services sector.
In summary, the FSA wants a retail market where:
information for consumers is clear, simple and understandable;
firms are soundly managed, adequately capitalised and treat their customers fairly;
regulation is risk based and principles based; and
consumers are capable and confident.
In FSA’s view, there are features of the retail investment market and the way products are designed and distributed that make these aims difficult to achieve. So late in 2006, FSA convened a number of industry Working Groups to investigate the issues and propose solutions. This work culminated in DP07/1 – A Review of Retail Distribution, published in June 2007. The Securities & Investment Institute (SII) was one of nearly 900 stakeholders that responded to the paper by end December 2007.
Access the SII's response to the consultation paper here.
The FSA published its Interim Feedback Statement on 29 April 2008, outlining its thoughts and reactions to the responses received and its plans to publish its final feedback in November 2008. The Interim Feedback set out three challenges to the industry to:
change business models away from how much advisers are paid;
develop and agree a common framework for professional standards; and
present propositions for new sales services, and “challenging firms to make the case for FSA action to help implement their ideas in a way that delivers better outcome for customers”.
FSA has published its consultation paper in June 2009. You can access it here.
How is the SII involved?
As a professional body that promotes professionalism in the industry, the SII is directly involved in the challenges that emerged from the interim feedback, notably ‘To develop and agree a common framework for professional standards’. The SII’s response to this challenge has been to work alongside three other leading professional bodies to set up the Edinburgh Declaration - a common perspective on the measures needed to improve professionalism in financial advice.
Since the release of the Interim Feedback statement, the FSA has set up a “Professionalism Working Group” comprising the SII and six other parties:
FSA
Chartered Insurance Institute
Chartered Institute of Bankers in Scotland
Institute of Financial Planning
Institute of Financial Services
Financial Services Skills Council.
Although the RDR focuses much of its attention on general financial advice, it embraces investment management – hence the SII and APCIMS involvement in the discussions. Both the SII and APCIMS want to ensure that no decision is taken which will adversely affect firms in the industry sector which both bodies support. The SII is an active member of this Working Group and has been responsible for drafting the policy papers on ethics and CPD in line with current SII practice.
The terms of reference of the Professionalism Working Group have been agreed and can be viewed here.
If you have any queries concerning the RDR as an individual or for your firm, please email us at RDR@sii.org.uk. Fresh information will be uploaded onto the website as soon as it is available: please revisit regularly for updates.
To visit the new website of the Chartered Institute for Securities & Investment, click cisi.org
