The UK Financial Conduct Authority has released the findings of its review of the FOFA-like Retail Distribution Review reforms in practice, six months on from implementation date.
The review – undertaken between February and April 2013 following the January start date of the reforms, which banned product commissions and created a formal definition of ‘independent’ advice – found that “the majority of firms have made progress and there was a willingness to the new rules”.
However, it also found a number of issues requiring further attention, including some firms “describing themselves as independent but in fact choosing products from a limited number of providers or products”.
This finding comes despite a binary distinction between “independent” and “restricted” advice stipulated in the RDR reforms.
The review also found some advice firms have been guilty of “not clearly explaining what service customers will receive for on-going fees”.
However, FCA director of supervision Clive Adamson said the review had to be viewed in context and that these issues may have been further resolved by this stage.
“The research for this report was undertaken just a few months after the implementation of RDR, so provides an early snapshot of what has changed,” Mr Adamson said.
“This early view shows that, while firms have acted, they still have more to do if a customer is going to be in the best possible position to understand the charges they will pay and the service they will receive.”
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