The retail distribution review
Retail nancial services; regulation;
nancial advice market review
Glasgow Caledonian University, Glasgow, UK
Purpose – The purpose of this paper is to review the effect of reforms to the UK’s retail advice sector
as a result of the Retail Distribution Review (RDR).
Design/methodology/approach – The paper takes the form of a review of the RDR in the context of
the Financial Advice Market Review (FAMR).
Findings – There is a lack of clarity, experienced by both consumers and nancial advisers,
concerning the nature of “advice”. This results from the use of an array of regulatory and non-regulatory
terms. Whilst enhancing professionalisation and reducing commission bias, the RDR is failing to
address the needs of many nancial consumers – identied by many as an “advice gap”. It is argued that
the focus of the RDR, and previous reforms, on addressing market failures may be misplaced.
Practical implications – The paper provides an analysis designed to help in the process of
developing a retail advice sector that meets the needs of consumers, in the context policy reforms
placing more emphasis on the responsibilities of individuals for nancial planning.
Social implications – The study has the potential of better outcomes for consumers and reputational
returns for the nancial services sector.
Originality/value – This paper is a review of the current regulatory issues facing nancial advisers
and retail consumers in the context of the RDR and FAMR.
Keywords Financial regulation, Financial intermediaries, Personal nancial planning,
Retail distribution review, Retail nancial services
Paper type Technical paper
[…] the Retail Distribution Review (RDR) is one of the core strands of our retail market
strategy […] […]. It is essential for promoting a resilient, effective and attractive retail
investment market. The RDR will modernise the industry, giving more consumers condence
and trust in the market at a time when they need more help and advice with their retirement
and savings planning. (FSA, 2008a,p.3)
The Retail Distribution Review (RDR), which came fully into effect at the beginning of
2013, is the most recent in a series of regulatory reforms in the UK retail advice sector. Its
stated aim has been to create a competitive advice market which provides clarity and
innovation in relation to retail nancial products and services, along with adviser
professionalism that inspires trust and enables consumers to have their needs addressed
(FSA, 2009, p. 5).
Many would argue this came not a moment too soon. A line of scandals, including
endowment mortgages, personal pensions and split capital bonds (Black, 2002;Dunn,
2009;Goff and Cadman, 2014), suggested previous reforms had limited effect on the
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Journalof Financial Regulation
Vol.24 No. 2, 2016
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