Retail Distribution Review
This review of the financial advice/planning profession begun by the UK regulator, the Financial Services Authority, in 2006 was completed in 2012. Its recommended changes came into force on 31st December 2012 and is binding on all Financial Advisers. Among other aspects of the financial advice profession reviewed was the level of qualifications historically and currently held by practising financial advisers. For about 25 years, the minimum standard has been only the Certificate in Financial Planning, formerly called the Financial Planning Certificate, which sits at Level 3 in the National Qualifications Framework, equivalent to an A level.
After various discussion papers and consultations,the FSA has stopped short of requiring advisers to obtain a Level 6 (degree level) qualification such as Chartered Financial Planner, and require advisers to obtain a level 4 qualification (equivalent to the first year of a degree), by the end of 2012.
Some of the RDR’s key points are :
People will now have to pay for investment advice. No commission will be paid from product providers to financial advisers for investments introduced to product providers.
Investors know up front how much advice is going to cost and how they will pay for it. Financial advisers can either be independent or restricted.
Following the changes, financial advisers that provide ‘independent’ advice now have to consider all types of investment areas. They can also consider products from all firms across the market. An adviser that has chosen to offer ‘restricted’ advice can only consider certain products, certain product providers or both.
People must be able to identify and understand the service they are being offered.
All investment advisors will be qualified to a new, higher level which is regarded as equivalent to the first year of a degree (although they may be more highly qualified e.g. Chartered Financial Planner equivalent to Honours degree standard).
Read more about this topic: Chartered Financial Planner
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