New FSA chief executive Hector Sants has warned adviser firms they must be ready and willing to change their business models in response to the retail distribution review to put an end to market failures.
Speaking publicly for the first time about the RDR, Sants told the annual public meeting in London: “It is obviously clear from the fact that we have initiated the debate and the comments we have made about market failure that we are envisaging working with the industry to change the business model and if you change the business model, firms will have to change and there will be different types of firms carrying out different types of activities in the future.”
Outgoing chief executive John Tiner said it was too early to predict the severity of the changes that need to be made and what would happen to the majority of current IFAs as a result of the RDR.
He said the retail distribution review was looking to drive towards a more efficient marketplace to benefit providers, clients and advisers but advisers would have to wait for the formal consultation process to get a better idea of the future landscape.
Tiner said: “As a consequence of moving to delivering incentives which operate identically to customer needs means there is going to be a shake-up but I cannot pre-judge the extent to which that needs to take place.”