The Retail Distribution Review or RDR is a process set up by the Financial Services Authority or FSA to regulate how recommendations are made to investors about investment products such as funds and pensions.
The Retail Distribution Review (RDR) is a key part of the FSA’s 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; and
– Consumers receive advice from highly respected professionals.
To achieve this we 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).
Advisory and product provider firms should start to evaluate their business models now and make the necessary changes to meet our requirements.