From 31st December 2012, the Financial Conduct Authority introduced new rules around how financial advisers describe their services and how consumers pay for them. These changes are commonly known as the Retail Distribution Review or RDR.
The Financial Conduct Authority is using the RDR to increase the standards of qualification that financial advisers have to meet.
All Financial Advisers have to hold a statement of professional standing (SPS), which they can only obtain by being a member of an accredited body and passing the new QCF Level 4 Diploma exams.
Covering the following six compulsory units, the Diploma develops core technical knowledge and financial planning capabilities:
- Financial services, regulation and ethics.
- Investment principles and risk.
- Personal taxation.
- Pensions and retirement planning.
- Financial protection.
- Financial planning practice.
All the advisers at Orchard House (IFAs) Ltd. are QCF level4 qualified and hold SPS statements through the Chartered Insurance Institute / The Personal Financial Society (CII/PFS) as a minimum unless they are still trainees.
Trainee advisers must have passed “Financial services, regulation and ethics” before they can have a meeting with any clients, but can not give advice until they have passed the relevant qualifications. For more details about how we train new advisers please contact us.
The Personal Financial Society is part of the CII Group and is the leading professional body for financial advisers and those in related roles in the UK.
‘Independent’ or ‘Restricted’
Another aspect of the RDR is that Financial Adviser Firms are being separated into two categories ‘independent’ and ‘restricted’
Your adviser must tell you whether they can consider using products from any financial product provider firm across the Whole market (independent) or only a limited number of financial product provider firms (restricted).
Some advisers will only be authorised to give advice on some of the financial products available but not all (restricted advice).
Orchard House (IFAs) Ltd remains Independent.
How consumers pay for financial advisers services:
You may hear more about RDR in the media. Whatever you hear, these changes do not mean that you’ll have to start paying any more for our services.
Advice has never been free. If you have received financial advice in the past you have probably been paying ‘commission’ to your adviser. Often the company providing the financial product would have paid your adviser a percentage of the sum you paid as commission. From 31 December 2012, instead of you paying “commission” on new products you and your adviser will agree how you will pay for the advice. We already explain to our clients how we are paid so this has not been a noticeable change for us.
Please follow this link for the Financial Conduct Authority guide to the RDR changes