By Claire West
This Monday 29th November, the House of Commons will be addressing the new set of rules proposed by the FSA on the RDR (Retail Distribution Review). These are designed to address concerns over the standards of advice offered by financial advisers, however, initial feedback from Financial Services companies across the country show concern that bureaucracy could take over - to the detriment of customers.
The debate is set to highlight the challenges these new rules will bring to financial services companies but the Financial Services Skills Council (FSSC) while supporting any positive move warns that all changes should keep a focus on benefitting the customer rather than increasing red tape, in an already ‘legislation heavy’ industry.
Sarah Thwaites, Director of the Financial Services Skills Council says,
“Whilst all of us would agree that a more professional approach can only be of benefit, let’s not lose sight of the consumer in all of this. The danger is that if too few existing advisers meet the new qualifications level, or the industry does not find it cost-effective to offer advice to the mass market, the very important aim of achieving good consumer outcomes may be lost.”
The FSSC, with the FSA acting as an observer, is working to encourage best practice and improve standards through its initiative - T&C Standards and Good Practice Guidance* which aims to develop and update T&C standards & Good Practice Guidance alongside the FSA’s own work on corporate governance, professionalism, competence and ethics. This will provide clarity and consistency of interpretation of the FSA T&C rules and professionalism requirements, and the RDR will have to carry out any changes in the context of existing T&C rules. Once done, will increase certainty for firms in the implementation and application of competence practice and the new professionalism benchmarks, and provide examples of good T&C practice in its fullest application as part of a firm’s management of people risk & performance.
The objectives of this project in light of Monday’s RDR debate are to update the existing T&C standards and guidance document, taking account of relevant regulatory changes or proposed changes. They also aim to improve the guidance so as to remove some of the uncertainty and concern of firms in the application of TC rules and provide specific guidance relevant to RDR transition and implementation.
Thwaites continues, “During the Retail Distribution Review (RDR) professionalism discussions, examinations have taken centre stage. Whilst generic technical knowledge is an important strand of competence, the ability of the individual in terms of the skills needed to undertake the role and the ability to apply their knowledge in practice are equally if not more important.”