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.”