RDR 'will drive consumers away'
The Financial Services Authority's Retail Distribution Review (RDR) may serve only to turn people away from financial advice, senior insurance executives say.
Two-thirds of attendees at an RDR debate hosted by consultants Watson Wyatt said the Review will either have no impact or a negative effect on consumer uptake of financial services products.
The results will concern the regulator, which has repeatedly outlined the RDR's main goals are to increase and improve access to unbiased financial advice in the UK.
Additionally, almost 60% of the audience said they thought the cost of advice to consumers would increase as a result of implementing the RDR.
"To many in the industry the FSA's feedback statement last November was a fudge, blurring the lines between sales and advice, while to others it showed that the FSA had kept its consumer focus by offering a number of routes to market," Watson Wyatt senior consultant Sarah Luheshi says.
"Most people in the industry do not believe consumers will gain a better understanding of how they can access financial services products because of the changes proposed in the RDR, nor do they believe that consumer uptake will increase.
"The great concern is that the RDR involves significant costs but with no or little benefit to the industry or its customers. It appears that the RDR will not achieve the goal of bringing financial advice to a wider market."
The debate also dealt with fears IFA numbers will fall dramatically if the RDR is implemented in its current form.
Three in ten audience members said IFA numbers will fall by more than 25% over the next five years, including 7% who believe numbers will be cut by more than half. Just under 50% said IFAs would decrease by up to 25%.
Wednesday 21st January 2009: 11:45