Here at AT8 we have followed the Retail Distribution Review with interest.  In particular we have been studying the impacts on the ecommerce and POS solutions in the market today.  The last few years have seen a massive refresh in the technology being used by distributors and it will be interesting to see how these solutions are able to be flexed to meet the demands of RDR. 

To this end AT8 are undertaking a survey of the major software vendors to the financial services to understand the readiness of the IT market to support the potential changes to the financial services industry.  The early results are already fascinating.  There appears a real polarisation between those companies like Focus, 1st and Distribution Technology who have seen and understood the potential impact of RDR and are investing in understanding the changes further and enhancing their solutions to meet them, and those who simply don’t believe there will be any impact or who are unaware of the full nature of the proposed changes.

If you are interested in getting a copy of the results of this survey when published in September or if you are an IT vendor and would like to take part in this survey or  please e-mail me at mark.loosmore@at8-group.com.

Last year there was much anguish and heated correspondence about the proposals in DP07 under the FSA’s RDR. The FSA issued an ‘Update’ [Interim Report] in April 2008 and intend to issue their ‘Feedback Statement’ in October 2008. What the FSA are now saying in response to feedback is that the original proposals should be made much simpler and in theory, clearer for all – especially the consumer. With a clear distinction between ‘Advice’ being provided by IFAs only and ‘Sales’ being strictly non advised, this leaves the current tied and multi-tied distribution models operated by some of the large institutions with some serious thinking to do!

Add in that the FSA still expects CAR with NO Provider influence over remuneration along with the Professional qualifications benchmark and you can see that there are some major implications for all parties – manufacturers, distributors and support services providers in the industry (e.g. technology, compliance and training companies [as well as Professional Institutions]).

Whilst things may change between now and October, there appears to be little outward activity to challenge these proposals, which, with some of these implications has been a little surprising. However, I also wonder how many people really do understand what is being proposed! In various discussions that we have had with providers, distributors and technology suppliers, it would seem that there is a view from some that ‘it won’t happen’ or that it won’t in it’s current structure… some say they ‘don’t know how it would or could work’ whilst others have simply admitted that they haven’t even read the Update!

Whether companies plan to accept and implement the potential changes needed or oppose them, all of those affected need to be aware and understand what is proposed and how they are affected so that they can adapt effectively or oppose effectively.

According to the FSA 87% of firms failed to meet the March TCF deadlines which required firms to have the systems in place to test their TCF processes.  I am not surprised that many failed to meet this deadline but 87% is a massive number.

Against this back-drop I have been pleased to see a number of technology firms providing specific support for TCF.  Kaleidaview – a web-based tool from Golley Slater – hit the press this week and shows potential value by driving TCF directly from their online customer questionnaires. Other companies like Mclaren Solutions are also have offering similar solutions in this space.

For me though, it makes most sense for TCF to be directly run from a distributor’s core systems with real-time data that also avoids rekeying of data.  This approach has been adopted by the True Potential team with comprehensive and impressive results.  You can tell True Potential believe they are onto a winner with their TCF solution which is supported by the glossy marketing material they have invested in.  Indeed, some of the other suppliers in this space fail to even mention TCF on their websites!  That’s not to say the True Potential solution is all gloss and no substance – they say that they have read and inwardly digested 106 FSA documents in designing the solution.  From what I have seen, it looks like they have struck the right balance of meeting the FSA objectives with a thorough understanding of how to incorporate this into the day to day business practices of the Adviser.

It works on 5 basic phases:

• Gather the data from the core systems they have
• Analyses this data
• Circulate the information
• Build and record action plans based on this analysis
• Measure performance against these actions

Of course the distributor is guided through this process in a user friendly way and all of this is logged and auditable along the way. 

All of this places True Potential’s users in a good position for the December deadline and I watch with interest to see how other software vendors respond to help their own users as well.