It is the RDR home straight. On paper, complying with the new rules looks relatively straightforward. “All” you have to do is pass a few exams and be a little more clear about where your “commission” is coming from. In practice, it is a little more complicated.
On professional standards, now the FSA has started granting accredited status to professional bodies, it is becoming clear what will be required to gain a statement of professional standing.
Individual approved persons have been used to indirect regulation, via the authorised and regulated firm, but by the end of next year, the responsibility for this indirect regulation at an individual level will shift to a professional body.
Passing exams and completing gap-filling activity should be simple enough. Those who appear most vocal in their resistance use the experience argument. That argument could be used to suggest the exams are easy to pass.
When it comes to applying for an SPS, I can envisage a scenario where lots of advisers leave their applications until the last minute which could cause problems when they discover their gap-filling is not up to scratch.
Self-imposing an earlier deadline for getting an SPS makes sense.
A much bigger risk surrounds pricing and proposition.
Some of the conversations I have had recently with advisers suggest an assumption they will be able to switch off commission on December 31 next year and switch on advisercharging the following day.
In some respects, this might be possible. Where you are simply moving from a commission charge for implementation to an adviser charge for implementation, also deducted from the product, the remuneration structure looks broadly similar. Nothing says you must charge a fee for advice.
I think any adviser who continues to give away advice for “free” from 2013 has a screw loose but it is a personal choice to use a “remuneration for product sale” model.
Where adviser-charging does differ greatly from commission is transparency. It is this transparency, where your clients can see what and how you are paid, that has the potential to derail a quick changeover from commission to adviser-charging.
Without a compelling proposition, it is unlikely that any investor would part with cash via adviser-charging, even if they had been happy to do so via the commission mechanism.
It takes time to create, test and refine a compelling proposition. This is not something that can happen overnight. It is probably not something that can happen in the space of a few months.
The FSA deadline is an absolute deadline. It might be considered foolish to allow your business to get anywhere near it without being ready.
Martin Bamford is managing director of Informed Choice