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Only 100 responses to RDR

The head of the FSA’s retail distribution review Amanda Bowe says the regulator has received only around 100 responses to the discussion paper so far.

Speaking at Osney Media’s financial services distribution summit in London last week, Bowe said the responses cover a variety of reactions, ranging from embracing the ideas to “rubbishing” the proposals.

Bowe stressed that the discussion paper marked the beginning of the debate and the RDR is an open discussion and not the end of the process.

She said: “We do not believe it is our role to create markets, destroy markets or to define their structure.”

Primary advice will not have lower standards of regulation, according to Bowe, but will have “standards appropriate to the risks”.

She rejected the idea that primary advice is a “meal ticket” for the banks and said forward-thinking IFA firms could easily fit this into their advice offering or even specialise in it.

Bowe said: “On this basis, there is nothing to threaten the market for full financial advice. In fact, the combination of a national generic advice service and the development of primary advice may well increase the overall market for financial advice, bringing benefits to all.”

She added: “I want to be very clear here. While it might not result in the most suitable advice and product solutions, it must not result in unsuitable advice and product solutions.”

On qualifications, Bowe said the FSA is not focusing just on higher qualifications but also on higher professional standards including ethics, competence and experience. She suggested that ISO 22222 could provide an alternative or complementary standard to chartered or certified status.

Bowe said the customer-agreed remuneration proposals aim to shift the debate away from fees versus commission and remove the risk of commission bias.

She said: “Many intermediaries have told us that they are fed up with receiving marketing emails from providers with special offers on commission rates, thus fuelling the fire about product or provider bias. So the proposals here are not just aimed at the receivers of commission, they are aimed at the givers of commission.”

Bowe did not make any commitment on the use of the word independent but acknowledged that many respondents have pointed out that independence means choice for consumers and therefore rules out tied or multi-tied advisers.

She said: “This may be where we end up. We will explore this and other questions further over the coming months”


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