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The FCA's RDR post-implementation review

PFS Policy Briefing

Publication date:

05 January 2015

Last updated:

22 September 2017


Policy and Public Affairs

The Financial Conduct Authority (FCA) published its detailed findings on how the investment advice sector is complying with its new Retail Distribution Review (RDR) rules that came into force two years ago.

As end-2014 marks the two-year point since RDR implementation, the regulator commissioned Europe Economics to undertake the first phase of a post-implementation review. In undertaking the phase 1 report published this month, Europe Economics also considered the findings of several other reports commissioned by the FCA as part of a wider evidence-gathering process.

The findings from this review provide further evidence of the increasing professionalism of the financial advice sector:

  • They observed a material improvement in the way firms disclose the cost of their advice, their scope of service, and the nature of their services to clients. This suggests firms have responded positively to the findings from the second cycle of the review. As a result, clients should be in a better position to understand the nature of firms' services and the charges that apply. However,
  • There remains scope for further disclosure improvements. In particular, the FCA highlighted concerns that some firms are failing to provide individual clients with clear disclosure, in cash terms, of the ongoing charges they will be paying for the firm's ongoing service;
  • Research also suggests some consumers have limited awareness of the fees they are paying for ongoing services; and
  • One firm was found not to be sufficiently engaged with the changes the RDR requires, and referred to the FCA Enforcement and Financial Crime Division.

Next Steps: 

  • The next phase of the review will be published in 2017, allowing the FCA to draw from at least three years of evidence as firms complete the transitional process, allowing a more complete analysis as to the medium-term impacts of the RDR.
  • The regulator will also be carrying out work to improve information disclosure and service labelling, due for publication in Q1-2015.

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This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.


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