Industry must engage to meet RDR needs
24 September 2014 Luxembourg
Image: Shutterstock
According to a new study by the Association of the Luxembourg Fund Industry (ALFI) and Fundscape, the most important lesson to be learned from the UK’s experience of the Retail Distribution Review (RDR) is that positive engagement between all parties creates an easier process and regulation that works effectively for all concerned.
The report, Navigating the post-RDR landscape in the UK, looks at RDR, which came into effect in the UK on 1 January 2013 and aimed to improve adviser qualifications and remove product bias from the advice process by changing the way advisers are remunerated.
The report found that despite predictions that the UK financial services industry would ‘implode’ under such radical regulations, the timing of RDR coincided with a more sustained recovery in the UK, an improved outlook in the Eurozone and consequently rising stock markets.
The biggest failing of the RDR was found to be the advice gap, with advisers finding advice was too expensive for some clients or too unprofitable.
The study also incorporates the Dutch inducement ban, as well as the impact of RDR/Markets in Financial instruments Directive on Europe and its potential impact in France, Germany, Italy and Spain.
Marc Saluzzi, chairman of ALFI, said: “Regulators and the industry need to work together to ensure clients of all size can access affordable advice and investment products. Only then can we achieve significant growth for our industry, and have more satisfied investors.”
“As concepts of RDR are adopted more widely across Europe, the fund industry has an opportunity to have wider appeal as long as it learns from the lessons of the UK and the Netherlands.”
“The main message for the industry is that, to anticipate and avoid any pitfalls, we must engage, engage, engage; engage with policy makers, engage with the regulators, engage with distributors and, last but not least, engage with consumers.”
The report, Navigating the post-RDR landscape in the UK, looks at RDR, which came into effect in the UK on 1 January 2013 and aimed to improve adviser qualifications and remove product bias from the advice process by changing the way advisers are remunerated.
The report found that despite predictions that the UK financial services industry would ‘implode’ under such radical regulations, the timing of RDR coincided with a more sustained recovery in the UK, an improved outlook in the Eurozone and consequently rising stock markets.
The biggest failing of the RDR was found to be the advice gap, with advisers finding advice was too expensive for some clients or too unprofitable.
The study also incorporates the Dutch inducement ban, as well as the impact of RDR/Markets in Financial instruments Directive on Europe and its potential impact in France, Germany, Italy and Spain.
Marc Saluzzi, chairman of ALFI, said: “Regulators and the industry need to work together to ensure clients of all size can access affordable advice and investment products. Only then can we achieve significant growth for our industry, and have more satisfied investors.”
“As concepts of RDR are adopted more widely across Europe, the fund industry has an opportunity to have wider appeal as long as it learns from the lessons of the UK and the Netherlands.”
“The main message for the industry is that, to anticipate and avoid any pitfalls, we must engage, engage, engage; engage with policy makers, engage with the regulators, engage with distributors and, last but not least, engage with consumers.”
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