No Blame No Claim Investing Problem

No Blame No Claim Investing Problem.

Retail distribution review (RDR) rules started on 01/01/13.  This means that:

• For financial advice you must be quoted a fee, this should be a set monetary fee but many advisers opted to quote percentages.
• Financial advisers must secure degree equivalent qualifications.
• Financial advisers must label themselves independent financial advisers i.e. advising on the whole of the market or restricted advisers where only certain parts of the market are advised on or not all investment, pension and insurance companies are considered.
• No advised selling, opted for by many banks, direct sale forces and online services can still take full commission on sales i.e. no advice, no liability but full commission and charges.

One of the larger debates is whether the restricted advice term is confusing to the public.  This is because even though a broker may be restricted as they offer advice only on mortgages or insurance or pensions – they actually offer “whole of market, independent” advice on their specialist subject.

Comment

The legal profession i.e. solicitors functions well without the need for a tag as many solicitors only offer legal advice on certain areas e.g. criminal, property, family, company law etc.

We see the issue of restricted v independent financial advice being of little consequence.  Restricted advisers should just use there area of specialism as a title e.g. Mortgage Broker, Pension Adviser and Independents should keep their tag.

The issue we believe is making the “non-advised” full commissions services more transparent:  These should be described more accurately to help the public e.g. “No Blame, No Claim Broker”