The Retail Distribution Review commences on 31st December and brings in a whole host of changes to financial advisers including level 4 qualifications and a ban on commission.  There is a knock on impact to product providers and platforms who are also banned from paying for distribution.

The FSA has focused on adviser charging and platform services and rebates.  However their policy purpose goes much wider and intends to ban any form of payment by providers to distributors.  Arrangers who may think they can slip through with 'pseudo platform propositions' better watch out as the regulator will clamp down on any 'mechanism' that attempts to avoid the RDR adviser charging rules and the general ban on commission.

Obtaining retail client consent requires many hoops to be got through for providers and platforms to facilitate adviser charging.  Any attempt to rebadge commission as adviser charging is likely to run into trouble.  However quite often the reality is the customer will pay the same and probably won't read all the paperwork that explains the difference.  Nevertheless the cost of compliance has been huge and will be ongoing.

Published: December 2012
By: Anthony Smith

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