Does a recent question and answer session in the House of Lords suggest a volte face on the retail distribution review (RDR)?
As the Treasury Select Committee’s review of the FSA’s retail distribution review (RDR) continues, attracting more than 200 submissions, a question and answer session in the House of Lords has confirmed that firms registered in European countries transferring into the UK which provide financial advice will not have to comply with the RDR.
Liberal democrat peer Lord Dykes put the written question to Lord Sassoon, commercial secretary of HM Treasury in the Lords, who answered: ‘The European Union’s passporting criteria, which govern the ability of firms to offer services outside their home member states, are not affected by the RDR. Where a firm passports into the UK, it will be subject to the regulations of its home state. However, a firm will not be permitted to operate on a cross-border services basis in the UK if it is doing so for the purpose of evading standards.’
Other questions included whether the government has assessed whether the objectives of the RDR will be met and whether the government will ask the FSA to delay implementing the review until the concerns of the adviser community can be met.
While Sassoon did not provide a direct answer about whether there would be a delay in the implementation of the initiative, he answered: ‘The costs and benefits of the RDR, including impact on the advice sector and consumer outcomes, have been considered in several cost-benefit analyses by the FSA. This includes an assessment of the likely number of financial advisers who may leave the industry. These analyses were informed by independent research and are available via the FSA’s website.’
Meanwhile, Sassoon’s opening statement put the ball firmly in the FSA’s court: ‘The Retail Distribution Review is an initiative of the FSA, which is an independent body and, as such, is responsible for considering the impacts and timing of the RDR. The FSA has published final rules on all elements of the RDR, following extensive consultation with the industry, which are due to come into force at the start of 2013.’