Ouch, our heads hurt at AT8 at the moment! Unfortunately not from too much partying (though the Money Marketing awards were very good!) but from working through the latest outputs from the FSA. Those lovely people from Canary wharf produced not one update last Friday but three, with a total of over seven hundred pages for people to plough through.
Luckily here at AT8 we have everyone’s favourite compliance (well ex-compliance actually) man to work through the documentation for us and outline the core findings.
In essence, the papers did what they said they would do; provide more clarity and certainty to some of the issues raised by the previous papers (especially CP09/18 and CP09/31). They don’t appear to have had too many U turns (with a few noticeable exceptions including provider decency checks) and there were very few major surprises.
I don’t propose to go through the detail of the findings of all three papers in this blog as we couldn’t do it justice in such a word constrained format, but I did think it was worth pulling out some core themes.
The first area to note is that there is no let up in the move to the new adviser-labelling regime. Independent Advice has had some clarification around the definition of ‘relevant market’ and the scope of ‘retail investment products’. It has been recognised that it was ok for some advisers to offer advice across a narrower ‘specialised’ market such as ‘ethical investments’, but they do not expect there to be many justifiable specialisms. It was also noted that it would be possible for a set of products to be excluded from a firm’s range of options if they were found to be ‘not suitable’ for their customers. These are pragmatic interpretations that should be welcomed but not confused with a dilution of intent – the FSA still appears focused on delivering the new labelling and new standards of advice for the benefit of customers.
There is also no let up in the move to fees – adviser charging – or to more professional standards across the board – independent and restricted advisers alike.
It is interesting to note that throughout the paper there is consistent referral to the use of effective systems to monitor and log RDR compliance. Those readers providing IT systems to advisers would do well to get under the bonnet of what this will mean in relation to what they currently provide as meeting this requirement represents a real opportunity to provide a clear business case for the use of IT.
One big area of clarification is in the world of Platforms in the form of DP 10/2. The paper looks at:
• How the Platform Operators are remunerated for the services under the RDR regime
• How adviser charging should operate through platforms
• How ‘Independent’ and ‘Restricted’ Advisers use platforms
The FSA leaves a clear message that they are very concerned about the potential for product bias that could arise from using a single platform (or even a small number). They clearly suggest that advisers need to ensure that the platform used does not disadvantage the client in any way. The ability to evaluate and show the relative merits of a Platform’s ability to meet the needs of customers will need the help of a new breed of platform comparison tools. We note that IFA Market Watch now has a price comparison tool for platforms while Capita has just launched a tool that includes qualitative information as well as pricing information.
As the industry digests the outputs, time marches on and people need to accelerate their RDR readiness programmes. There are few short-cuts available, but external advice could help cut through some of the planning cycle. If anyone wishes to discuss their RDR readiness plans please contact us on 0121 314 2504 or e-mail marketing@at8-group.com.
