FSA came close to scrapping RDR

The FSA considered scrapping the retail distribution review at a board meeting in March but decided to push on with plans for fear of “losing face”, according to Lansons director of regulatory consulting Richard Hobbs.

Speaking at the Protection Review conference held in London yesterday, Hobbs said the FSA came close to ditching the RDR as recently as four months ago and claimed the regulator is “not particularly proud” of the review.

Hobbs told delegates that he expected the RDR to continue, despite rumours to the contrary, after it was announced the FSA would be replaced by a prudential regulatory body at the Bank of England and a new Consumer Protection and Markets Authority.

He said: “As for the RDR, I guess that will continue to completion. There are a great many rumours around the market that the RDR is to be pulled – I think that is completely untrue. I might have to eat my words but my view is it will carry on.

“I have to say, it only just survived an executive committee meeting in March at the FSA. The FSA are not particularly proud of the RDR but it is a question of losing face, so I think they will carry on.”

The FSA held a board meeting on March 25 – one day before it published its RDR policy statement, the RDR discussion paper on the platform market and a consultation paper on pure protection sales.

Summary minutes from the meeting show that aspects of the RDR were discussed including the consultation carried out on the RDR up to that point and in particular comments from the consultation on adviser charging and additional compliance costs.

At the FSA’s Annual Public Meeting in June, chief executive Hector Sants stressed that the RDR would go ahead under the new regulatory regime.

The FSA declined to comment.