Director general Chris Cummings says in the present economic climate, some providers cannot justify the costs associated with the changes.
He says: “The sheer scale of cost to implement adviser charging into their IT systems will run to tens of millions of pounds. The capital is not there today and if they do have capital, they need to keep it rather than spend it.”
Association of British Insurers assistant director of distribution reform Alex Roy says all businesses are sensitive to costs but adds: “The industry is clear on the benefits the RDR will have for consumers and is committed to meeting the FSA deadline of 2012.
“What would help insurers budget is if the FSA takes a pragmatic approach and gives further guidance on which products will be covered by the RDR.”
Cazalet Consulting director Ned Cazalet says: “A lot of products will need to be reconsidered and redesigned for adviser charging. Quotations, key features, marketing material and systems will also have to be changed. Clearly, anything that imposes financial strain, particularly in the current circumstances, could cause difficulties.”
Aegon head of corporate affairs Francis McGee says: “The deadline is tough but it is do-able, provided that the FSA keeps the proposals simple and the scope is limited to new business.”