10th September 2013

Scottish Life: RDR thematic review - summary of TR13/5

TR13/5 Supervising retail investment advice: how firms are implementing the RDR is the first report the FCA have shared on the progress advisers are making.

The FCA asked a cross section of 50 firms to complete an online questionnaire and also requested sight of disclosure documents. What did they find out?

Pass marks

The good news is that the FCA felt that "firms have made a lot of progress". "Firms had acted to implement the new requirements", "many firms' propositions were in line with the new rules" and "some firms had also tried to make their disclosure material clear and engaging."

Room for improvement

The FCA felt that improvement could be made in a number of areas. "Some firms were not providing clients with some or all charges in cash terms" and "some firms fell down by not being clear what ongoing services they would provide."

How firms described the services they offered was also flagged and there was a concern as to when generic charges information was provided i.e. how early in the process this happened.

It's worth noting that firms with a business model that is contingent on a product sale are considered by the FCA to be taking a "higher-risk approach than a time cost charging model due to the need to sell products to generate revenue."

Reaching the standard required

Helpfully the FCA has supplied examples of poor and good practice to help advisers reach the standard required.

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Investments, RDR