Much has happened in the field of regulation since the regulator’s overhaul of the advice market 10 years ago with the Retail Distribution Review.
“It’s an interesting time for regulation,” says Chris Morris, head of financial planning policy and engagement at the Chartered Institute for Securities & Investment, in the latest FTAdviser In Focus fireside chat.
“When we look at the purpose of RDR in terms of what broadly the regulator was aiming to achieve, it was very much about introducing technical knowledge and benchmark qualifications, so that financial advisers who were talking with clients had a certain level of knowledge and expertise, and I think the shift since 2012 has [been] from testing technical knowledge to making sure that clients have better outcomes, it’s regulated around that objective.
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“[Regulation has] definitely shifted and the consumer duty is evidence of that.”
Morris also points to other recent developments such as CP22/24: “Broadening access to financial advice for mainstream investments”, which “almost feels like the regulator is kind of steering back the other way in terms of trying to address the advice gap.
“There’s a lot going on but I think those two – the consumer duty and the broadening of investment advice – is an interesting one to watch,” he says.
The Edinburgh reforms, on the other hand, which roll back on regulations such as senior managers and certification regime and Mifid II, could encourage banks to go back to offering investment advice to a broader investor pool, says Morris.
“It’s certainly a mixed bag at the moment… But lots going on for sure.”
But while the RDR has been broadly positive for Morris, there were some clear unintended consequences that to date have not been fixed.
But Morris says he feels confident. “It’s a resilient sector and people will absolutely, I’m sure, work hard to recruit more people and this is some of the work that we are doing at the CISI, is to attract the next generation of financial planners so that we have a steady stream of advisers coming through so that they can keep up with demand.”
To hear more about the successes and challenges of the RDR project, click on the image above.