Retail Distribution Implementation Programme will mean a changing landscape for Financial Service providers
In June, the FSA (Financial Services Authority) publishes the results of its consultation with the FS industry on the distribution of retail investment products to consumers. Insurance, pensions, and financial planning are some of the services likely to be impacted. According to the FSA there are 3 fundamental objectives behind the regulatory shake-up:
- improve the clarity for consumers of the characteristics of different service types and the distinctions between them
- raise professional standards
- reduce the conflicts of interest inherent in remuneration practices and improve transparency of the cost of all advisory services
Product providers will no longer be able to pay commissions to IFAs for selling their products; their challenge will be to build channel loyalty through value-added services and explore alternative routes to market. Creating consumer pull, rather than relying on channel push, will be more important than ever.
For IFAs the landscape will change too. They'll need to invest in higher professional qualifications and will have to charge clients for advice - since they will no longer be remunerated through product commissions. This means a massive focus on proposition development and branding: why should a client buy advice? How does the IFA demonstrate value, performance and trustworthiness?
Industry players will have until 2012 to adjust and re-build their business models, strategies, systems and marketing. Many have already begun. When the FSA release the detailed timetable, the rest must start some serious thinking, research and planning.
If you want to comment on this article or find out how we can help Providers and IFAs in this changing landscape, just drop me an email.
Peter Roberts
