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Retail Distribution Review | 23
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and perceived bias within the current system. currently badging themselves up as already pro- on understanding the impact of these regulations
This move will further illustrate the professional viding this service when in actual fact they do and provide comprehensive governance, risk and
nature of the adviser and enable consumers to not. compliance solutions to help reduce this growing
put a tangible worth and value on the advice Looking a little further afield, in response to burden, allowing firms to establish a sustainable
received. concerns from other sectors such as the mort- growth environment.
Ultimately this means that advisers will set gage market and general insurance the regulator
their own fees and have these fees agreed with explained that 2009 will experience its commit- Implications
their clients so that a product provider can have ment to review, whether "developing proposals So, whilst there appears no sign of any immedi-
no real input in the process. The RDR also sets for the RDR consultation paper would create ate changes to the mortgage market on the
out some clear boundaries as it seeks to intro- practical differences for firms operating across horizon for 2009, to the same extent the FSA
duce a new standard for independent advice. markets" and that if this occurs, it "will consider makes no promises that similar changes will
This means creating a two-tier approach to what adjustments need to be made to prevent not be applied. With this in mind it may be
service. Firstly, that pertaining to independent that". prudent for intermediaries to realise the
advice. This means the term 'independent' being Breaking this down, the general insurance sec- potential implications if this were ever to prove
representative of advice that is unbiased with a tor will see the FSA considering whether there the case, especially if the remuneration proce-
greater representation and analysis of the market. are markets such as pure protection - where dures were ever to be bled through into this sec-
Secondly, there is the guided sale which the FSA financial advice figures prominently in the distri- tor. So whilst it is not quite a 'watch this space' it
sees as being for those clients seeking less com- bution - that might benefit from the RDR could well be a case of being 'forewarned is fore-
plex financial advice. It is envisaged that this approaches. armed'.
would fall in between an advised and non- In terms of the mortgage market a review of Clearly the regulatory landscape is changing
advised sale. the existing regime is currently under way but in and there are those that will say it is about time.
light of the findings so far, the FSA says that it is As with all change there is a certain amount of
Differential not currently minded to apply any RDR pain involved whether it is in the form of a
This differential will help create a clear distinc- approaches to this particular sector. change in process or the achievement of the
tion for the consumer between whether they are It seems unlikely that the RDR will be imple- required qualifications.
receiving independent financial advice – which is mented in the mortgage market but it is a valu- The RDR gives the financial community the
of course in their best interests – or simply able exercise for mortgage intermediaries to keep opportunity to engage with both the regulator
receiving advice on a limited number of prod- a firm handle on compliance procedures and if and consumer. By improving perception of the
ucts. However, meeting the new requirements of there firms have any compliance issues it is industry we will not only increase consumer con-
being in a position to offer genuine independent important to select a proven partner to work fidence but ensure there is a solid investment
advice may prove challenging for some firms with. A compliance specialist should pride itself market on which to build.
www.mortgageintroducer.com February 2009 Mortgage Introducer
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