Adviser > Your business > RDR > Retail Distribution Review > Introduction - Jan 2008 RDR Update
Introduction - Jan 2008 RDR Update
We are now some months into the Retail Distribution Review (“RDR”). In December, the Royal London Group submitted its response to the FSA’s RDR Discussion Paper (“DP”).
You can our full response to the Retail Distribution Review, of course, but in this web update we will look at where the debate may be heading, and outline Scottish Life’ views in two of the most critical areas for financial advisers. These are:
1. The structure of the distribution market
These pages represent our second web publication covering the Retail Distribution Review, and provide an update based on Royal London’s response to the FSA’s RDR discussion paper, submitted in December 2007.
Scottish Life participated fully in the drafting of Royal London’s response, which was submitted on behalf of all of the business areas and companies in the Royal London Group.
As we have noted before, we have been very involved with the Retail Distribution Review since its inception. Our Group Chief Executive, Mike Yardley, chaired one of the working groups while one of our senior managers, Ewan Smith, was closely involved with another.
Our first publication on the Retail Distribution Review remains available in our archive.
The FSA has proposed a distribution market that consists of essentially 4 types of distribution: Professional Financial Planners (“PFP”), General Financial Advisers (“GFA”), Focused Advice and Primary Advice. We have proposed a simpler model with only 3: PFPs, Focused Advice and Assisted Sales. We also comment on qualifications and the need for a professional body within the PFP segment.
2. The nature of remuneration
We note the unsustainable imbalance introduced into the industry by stakeholder, and show how Customer Agreed Remuneration (“CAR”) can restore balance to the industry whilst simultaneously eliminating “provider bias”. But, it can only succeed if it is applied across the whole industry and if it is defined rigorously enough to eliminate all forms of soft commissions.
In conclusion
In our In conclusion we argue that our response presents the best solution for customers, advisers and providers alike, and shows our commitment to “Scottish Life - the IFA champion”. However, in order to benefit from these changes now, you need to start preparing your business, if you have not already begun to do so.
You can do so by starting to write more CAR-based business, for example by using our Financial Adviser's Fee model. Our Business Toolkit will help you to adapt your business practices, and it will also help you to sell business based not on the short-term commission providers pay, but on their ability to add value to your business and to your clients, through innovations such as our Income Release product.
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1. The structure of the distribution market
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