The Retail Distribution Review (RDR) and the FCA

The Retail Distribution Review (RDR) was introduced on 31 December 2012.
One of the main aims of the RDR) was to increase transparency for consumers on the services offered by advisers and the charges for these services, and the clarity of the information firms provide to their clients[1] through their disclosure material is an important element of this.
The initial disclosure of the firm’s standard charging structure should help clients understand how much the advice is likely to cost and the service they can expect to receive in return (e.g. whether the firm is providing an independent or a restricted service).
The client specific disclosure should then provide clients with the cost of advice for their particular circumstances.

It should also be clear to the client what ongoing services are being provided, if applicable.

The findings[2] of the second cycle of our review, published in April 2014, were unacceptable.
The FCA expect to see significant improvements during the third cycle, which starts in mid-July 2014.

The FCA will consider further regulatory action against firms that are failing to be sufficiently clear with their clients.

To assist firms in meeting the disclosure requirements have published an assessment tool to enable firms to review their disclosure documents against the key disclosure requirements of the RDR.

This is similar to the template that the FCA used to assess compliance with the disclosure requirements in the second cycle of our RDR thematic review.
The FCA plan to use this to assess disclosure in the third cycle of our review.
The FCA encourage firms to use this assessment template to make any required amendments to their client facing documentation prior to this.

Although the template highlights many of the key disclosure requirements introduced by the RDR, it is not exhaustive.

The template does not replace compliance with or having regard to the Handbook Rules and Guidance, FSMA and other regulatory requirements.
When reviewing the disclosure material, firms should also refer to our Handbook (specifically COBS 6.1A and COBS 6.2A) and our thematic findings (TRs) that have been published

TR13/5: Supervising retail investment advice: how firms are implementing the RDR[3] (July 2013)
TR14/6: Supervising retail investment firms: being clear about adviser charges and services[4] (April 2014)
In addition to this the FCA have also published a factsheet: ‘Disclosing your firm’s charges and services’5 and a video highlighting the key disclosure requirements[6]

Links To References Above –