MPs Want Review of Fee Financial Advice

MPs Want Review of Fee Financial Advice.

The Treasury Select Committee has confirmed that a full scale review of the Retail Distribution Review (RDR) will be conducted in the Spring of 2014. 

What is RDR?

RDR was a review of the financial services industry after the credit crunch.  Included within the overall review was the Mortgage Market Review (MMR). 

RDR started on the 1^st January 2013

Financial Advisers were then required to have higher level qualifications, similar to accountants and solicitors

Commissions were banned for Financial Advice

Fees must be agreed with you for Financial Advice

Non Advised selling is still allowed to be paid full commission on the products they sell.

Result of RDR

Many financial advisers have left the industry.  It is estimated that nearly 20% have left the financial advice market.

Most banks and insurers have closed their financial advice arms preferring to do non-advised selling where they can still take full commission

The debate is now whether there are enough financial advisers that are accessible to the general public as many cannot afford or are not prepared to pay for financial advice.

The TSC will review the impact of RDR and whether it met government objectives and whether the withdrawal of the commission option for financial advice was a good one.

Comment

We warned the TSC many times before RDR started that banks would move to non-advised selling where the risk to consumer detriment would be even higher.

We will again start our lobbying with the TSC to help shape financial advice and how it is funded.