Up to 11 million additional people could seek financial advice if the aims of the retail distribution review (RDR) are explained to them properly, the Chartered Insurance Institute (CII) estimates.
The Retail Distribution Review (RDR) is a key part of a consumer protection strategy. It is establishing a resilient, effective and attractive retail investment market that consumers can have confidence in and trust at a time when they need more help and advice than ever with their retirement and investment planning.
The RDR aims to ensure that: consumers are offered a transparent and fair charging system for the advice they receive, consumers are clear about the service they receive; an consumers receive advice from highly respected professionals.
To achieve this they have published new rules that will require: advisory firms to explicitly disclose and separately charge clients for their services; advisory firms to clearly describe their services as either independent or restricted; and individual advisers to adhere to consistent professional standards, including a code of ethics.
These changes will come into effect on 31 December 2012 and will apply to all advisers in the retail investment market, regardless of the type of firm they work for (banks, product providers, independent financial advisers, wealth managers, stockbrokers).
Research commissioned by the organisation found 81% of the public does not know about the new qualification requirements, while 80% are unaware of how the changes will affect the way financial advisers are paid. However, once the outcomes of RDR were explained to them, 33% of those who do not currently take financial advice - some 11 million people - said they would consider doing so.
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