The RDR has failed to improve consumer trust in financial advisers, FCA Consumer Panel chair Sue Lewis says.
In an article for Apfa as part of a series of reports to mark the trade body’s 15th anniversary, Lewis says “not much has changed” in the past decade.
She says the RDR should have made a big difference to consumer attitudes, but cites a recent Personal Finance Society survey which found that less than a third of people who had not taken advice were aware of the new emphasis on professionalism and transparency.
And she says progress has been further hampered by some firms seeing regulation “as something to be challenged or evaded”.
Lewis says: “Successive FCA reviews of RDR implementation have found problems, such as the use of ‘in kind’ inducements to advisers to sell particular products, and failure to disclose costs fully.
“How can firms expect to be trusted when they demonstrate repeatedly that they are not trustworthy?
“It seems fair to say that not much has changed in the past decade or so across the industry, although we have not yet seen the full impact of a dedicated conduct regulator.”
Lewis says the biggest change for the future is likely to be an increase in online sales.
And she warns that problems identified with online annuity sales by the Consumer Panel, including lack of information and hidden commissions, also read across to online investment sales.
Lewis adds that the pension reforms announced in the Budget are an opportunity for advisers to demonstrate they can put advisers at their heart of their businesses.
She says: “So, what do consumers want? First, people need to feel their adviser is ‘on their side’.
“They need to understand when they are being advised (in the common usage of the word) and when they are being sold a product. People want straightforward products that they can understand, simple choices, and no jargon.
“They want to understand what, exactly, they are getting for their money and, ideally, to be able to judge the performance of their adviser.”