MEDIA CENTRE
Media Centre
29-04-2008
AIFA Praises RDR Interim Report
The Association of Independent Financial Advisers (AIFA) today (29 April) responded to the Financial Service Authority’s (FSA) Retail Distribution Review (RDR) Interim Report. AIFA praised the proposals for a clear demarcation between advice and sales; the requirement for ‘advisers’ to be whole of market; and the calls for higher professional standards. AIFA, however, issued a word of caution, stressing that the review still has a long way to go and that the IFA profession must continue to make its voice heard before the FSA’s next RDR paper in October 2008.
Chris Cummings, Director General of AIFA, said:
“We’re pleased that the FSA has been true to its word and put the needs of the consumer at the heart of its proposals. Given the economic climate, consumers need professional financial advice now more than ever. From the outset, we have said that the RDR should enable more consumers to get access to better financial advice. Consumers have a right to know whether or not they are being advised or sold a product, and they must have a choice over how they pay for that advice.”
The FSA’s paper includes proposals for a three tier market:
1. A new look, single tier professional advice sector with higher standards than today, built on advisers acting in the long term interests of their clients
- To be called an adviser, the advice offered must be whole of market.
- The remuneration model must be determined without input from providers, but adviser costs payable through the product are permitted.
- Qualification levels need to increase, but to a level more aligned with Diploma than Chartered status.
- The tied and multi tied community will not be able to operate as financial advisers, or be allowed to infer to consumers that they are offering advice.
2. A sales regime
- This will be strictly ‘non-advised’ consisting of guided sales and execution only and can operate within the current regulatory framework.
- The FSA will only change regulations to introduce a new sales regime if the industry makes a strong enough case for it.
3. A third tier of money guidance to sit outside of the regulatory regime
- Designed for consumers who are currently alienated from the industry, it will provide basic guidance on financial matters.
- No product sales or recommendations will be permitted.
- It will effectively act as a triage service, pointing consumers in the direction of sales, advice or self execution.
- More detail to be worked up over the coming months.
Cummings added:
“We are delighted to see that the FSA has recognised the validity of many of the arguments we made in our RDR response and Manifesto for Advice. A key component of both was direct polling of consumer views which found that 75% of consumers believe that independence means whole of market.
“The call for higher adviser qualifications is also to be welcomed. It is in everyone’s interest for the adviser community to have a common set of standards. The FSA recognises the need for a realistic transition period to ensure advisers have enough time to meet the new standard.
“The FSA indicates that all these proposals need to be reviewed in light of European Directives and the wider regulatory landscape. We will be working with the FSA to ensure advisers’ views continue to be heard.
“We still have a long way to go in the RDR process, but the interim proposals lay the way for a bright future for IFAs who are prepared to adopt the higher standards and provide a professional service to the growing numbers of people looking for financial advice.”
ENDS
For further information please contact:
Tracy Elwick Director of Public Relations and Marketing 020 7826 9030
Tony Cox/Simon Maule, Linstock Communications – 020 7089 2080
Notes to Editors
The Association of Independent Financial Advisers was launched in September 1999. Our role is to effectively lobby the Treasury, FSA, government, the EU and other opinion formers and policymakers to ensure the regulatory and business environment is positive toward members. It is AIFA’s objective to play a critical but constructive role within the regulation process - offering insights from the "front line" of the market. AIFA is a non-commercial, not-for-profit trade body. We exist solely to campaign for light touch and proportionate regulation and work for a positive market for members.
Tony Cox
Linstock Communications
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London
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T: 020 7089 2080 (Switchboard)
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www.linstockcommunications.com
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