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Axa Wealth warns of RDR impact on product launches

Axa Wealth has warned product development may suffer in the run-up to the RDR as providers concentrate on changing their systems to facilitate adviser charging.

Managing director of UK distributors David Thompson says the challenges over VAT and platform cash rebates mean that some product providers will have to devote their resources to upgrading their systems rather than launching products.

He says: “Axa is reasonably well positioned as we already have unbundled charging structures across most, if not all, of our products.

“But some providers will have to overhaul their products to introduce a new charging structure. They will then have to deal with the VAT complication and whatever happens with rebates. That is an onerous challenge to meet in 18 months.

“That is going to put a lot of pressure on providers and as a result I do not think we are going to see many new products being launched by the industry over the next 12 to 18 months.”

Thompson also questions the viability of a simplified advice proposition.

He says: “You have the contradiction of a simplified advice model which incorporates advice and therefore all the regulatory responsibility and cost associated with that for the firm offering a simplified service. At the moment, I do not think it is viable.”

Paladin Financial Services managing director Tim Purdon says he would be concerned if money that should be spent on improving providers’ client propositions was diverted to coping with system changes.

He says: “All the RDR costs, including the cost of system changes, have to come from somewhere. It is all a distraction, not just from offering more products, but from providing clients with the services they require.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. This is a classic example of the FSA having come up with a new idea without considering the difficulties it’ll cause for those charged with implementing it. Surely, the same objectives could be achieved by stipulating simplified charging structues (clean in, clean out from day one) and Customer Agreed Commission?

    The trouble, of course, is that if there’s a simple and cost-effective way of doing something and a complicated and expensive way of doing it, the FSA always seems to choose the latter. Why?

  2. Product development may suffer in the run-up to the RDR!

    Never, especially as Hector has promised that no consumers will suffer over RDR!

    But what are others product providers saying?
    Friends Provident: Announced that the retail distribution review (RDR) has meant it is no longer viable to market or develop new investment products.

    Paul Kennedy head of trusts and tax planning at Fidelity International said: There is a risk that investors will end up paying more tax on their investments which, coupled with the monster that is VAT, would leave them out of pocket.

    Robert Kerr, head of retail distribution development at Scottish Widows says: The RDR could have the unintended consequence of “disenfranchising” the majority of consumers from financial advice.

    Bankhall managing director David Golder says write to the regulator, write to your MP. Do not let the FSA get away with some of the things that will lead to the widespread decimation of our industry.”

    Richard Howells Director Zurich LifeJune says: “The big question mark is still around what benefit it will have for the ultimate consumer. I am still not convinced that all of these changes, when you sit down with a consumer and explain them, actually give rise to a consumer benefit that I can really hang my hat on.”

    AVIVA Life marketing director David Barral has said the firm predicts by 2013 IFA numbers will fall to 10,000 in total as advisers fail to comply with RDR changes!


  3. Stating the bloody obvious again – this is another reason why RDR will fail.

    Funnily enough, I think that providers will break rank and stick two fingers up to RDR as soon as they realise that their business is suffering as a result – that wont take long. Commission paymenst again ??? wouldnt be surprised !!!

    Thing is where were the providers when RDR was in its infantcy – nowhere their silence was deafening – indeed a lot said RDR was the greatest thing since sliced bread – now they have woken up and seen what a catastrophy RDR really is.

  4. Hold your horses there! whats the point in a product development who is going to want to know.

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