The retail distribution review

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 financial 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 financial consumers – identified 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 financial planning. Social implications The study has the potential of better outcomes for consumers and reputational returns for the financial services sector. Originality/value This paper is a review of the current regulatory issues facing financial advisers and retail consumers in the context of the RDR and FAMR.