In June 2009, the U.K. Financial Services Authority (FSA) issued a consultation paper on Retail Distribution Review.
A far-reaching overhaul of the relationship between clients and their advisors/financial services firms, the RDR proposed:
(1) to ban commissions paid to financial advisors by product providers to eliminate the potential conflict of interest, moving to a fee-based compensation system for financial advice;
(2) to raise professional standards by requiring all financial advisors to deepen their product knowledge and pass exams;
(3) to distinguish between advisors making recommendations based on unbiased review of the market and those who are limited to sell the products manufactured by a single product provider.
The changes will affect all investment firms, banks, insurers, wealth managers and financial advisors. Work on the RDR began in 2006; final rules are expected by 2010, coming into effect in the end of 2012.
In our latest submissions on the Client Relationship Model, FAIR Canada called on Canadian regulators and industry organizations to review regulatory initiatives around the globe to ensure that Canadian investor protection keeps up with international best practices.
