Head of supervision at the UK Financial Conduct Authority (FCA), Clive Adamson, has said that the regulator sees shortcomings in the way some market participants have responded to the Retail Distribution Review (RDR).
According to Adamson, advisers have largely achieved the professional standards mandated by the new law, but the regulator still sees issues, adding, "Over the coming months, we will look at whether firms’ business models truly meet what was intended", reported Investment Europe.
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Adamson said the progress made by firms in complying with RDR will in all likelihood be reviewed by the FCA in 2014 for the regulator to decide whether the initiative is working as planned.
RDR came into effect in the UK on December 31, 2012, and it mandates higher professional standards and restricts the payment of commissions to financial advisers.
Adamson further said the FCA is concerned that product manufacturers may still be using inducements to influence advisers, and while these efforts may fall within the written rules of the RDR, they do not follow "the spirit" of the regulation.
He added the emergence of new distribution channels was also causing concerns. "We are interested in what will happen in terms of the new models that are emerging," he said, adding that the FCA is seeking to work with advisers to understand the new ways products are being distributed to customers and the effects of RDR.
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By GlobalData"We have seen that retail banks have largely withdrawn from providing advice to the mass market. We are also starting to see that advisory firms are targeting wealthier individuals."
