Sector to be split between independent advice, restricted advice and non-advised sales. Restricted advice will include single- and multi-tied advisers who will have to reach QCF level four along with independent advisers.
Basic advisers, who come under the restricted banner, will not have to meet this benchmark qualification. This advice will follow pre-scripted questions to assess suitability for a stakeholder product. A full assessment of needs is not given nor is advice offered on whether a non-stakeholder product may be more suitable.
Adviser charging will be brought in for all types of adviser except basic, ending commission and requiring firms to set charges in agreement with clients.
Ongoing charges will only be allowed where continuing services are provided. This will not be applied retrospectively to trail commission.
Provider factoring will be banned. Advisers will be allowed to seek commercial lending agreements with the client.
The FSA will consult on how to apply adviser charging for group personal pensions. It will apply to GPPs where individual members are given advice on the merits of joining a scheme.
The FSA will review the charging structures of wraps and platforms.
The FSA will review possible changes to the protection market in light of the RDR due to concern that investment advisers may move into protection to maintain commission income. Results of analysis will be published in Q1 2010.
The FSA will bring forward to mid-2010 the decision on whether the Professional Standards Board should be created as an independent entity instead of as part of the FSA as an interim solution.
The Financial Services Skills Council will consult on appropriate examination standards for retail investment advisers at QCF level four from mid-August.
There will be no grandfathering but advisers will be allowed a work-based assessment as an alternative to exams. This will begin on June 30, 2009 and be withdrawn after the end of 2012.
The FSA estimates that the industry will face compliance costs relating to RDR implementation of £430m one-off and £40m a year. It estimates the direct cost to the FSA of implementing the RDR will be £2m one-off and £1.2m annually. It says there may also be short- term costs arising from market exits by advisers and increases in product prices.
Hargreaves Lansdown says it is reviewing whether to maintain its independent tag as a result of RDR proposals. It says no significant threats, retrospective changes or other costs have been seen as a result of the draft proposals since the bulk of its Vantage business is execution-only.
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