Since January 2013, advisers have had to charge rather than take commission. But awareness of the changes is low.
Have you heard of RDR? Do you know what it means? If you don’t, you’re not alone. Research by NFU Mutual shows that 95% of people didn’t know what RDR is and 87% said they’d not heard of it. It stands for the retail distribution review, and it changed the way financial advice has to be paid for, if you’re getting advice about investments.
The regulator, the FSA, has found some banks and building societies aren't giving good financial advice
The FSA carried out a mystery shopping exercise and found some advisers weren't getting enough information to advise clients.
The latest mystery shopping exercise by the Financial Services Authority (FSA) found that banks and building societies still weren’t giving good financial advice in all cases. The FSA carried out the mystery shopping last summer (between March and September 2012) and found that, while advisers were giving good advice in three quarters of cases, some weren’t.
Financial advisers can no longer be paid by commission for investment advice
From today no financial advisers will receive a commission from investments they sell and they’ll have to be better qualified.
If you go to see a professional for financial advice about investments, from today they won’t be able to be paid by commission from the company whose products they sell. The changes (called ‘RDR’ or the ‘retail distribution review’) apply to all financial advisers, whether independent or not advising about investments, but not to those selling insurance such as life insurance, income protection or critical illness policies. So what could it mean for you?