FCA: “Our Training and Competence sourcebook requires individuals who carry out certain activities for retail clients to hold an appropriate qualification. The Retail Distribution Review (RDR) professionalism reform is designed to raise standards and increase knowledge levels across the retail investment market.”
What? RDR is central to the FCA’s agenda of customer protection: giving customers confidence that the advice they are given and the products they are sold are best suited to their needs.
The regime consists of:
– A high-level competence requirement (the ‘competent employees rule’) which applies to individuals engaged in the regulated activity in all UK authorised firms as set out in the Senior Management Arrangements, Systems and Controls sourcebook (SYSC)
– More detailed requirements for certain retail activities, including the need to attain a qualification where relevant, as set out in the Training & Competence sourcebook (TC)
There are three key areas of training and competence that all firms need to consider:
– Assessing competence
– Maintaining competence
– Record keeping
If you are a financial adviser working in the retail investments market you need to describe your service as either independent or restricted:
- If you give independent advice, you need to offer your clients a broad range of investment areas and products from all firms across the market
- If you give restricted advice you can only offer your client certain products and product providers. You also need to tell your clients that you are restricted
You should:
- Agree your fee upfront with your clients and explain that financial advisers are no longer paid on commission
- Hold a minimum qualification of QCF Level 4 and undertake 35 hours of continuous training every year to keep your knowledge up to date
When? RDR came into force on 1st January 2013
Who? Everyone who gives financial advice MUST hold RDR compliant qualifications – level 4 diploma in Regulated Financial Planning, or equivalent. A total of 140 points is needed for RDR accreditation, of which 80 should be at diploma level (even if you have 140 points but have not passed any RO exams, it’s highly unlikely you’ll meet the RDR requirement)
Why? It makes you more attractive and gives you the potential to earn more money.
How? Even if you don’t give advice, but undertake a range of tasks such as past business review, file checking or complaint handling, RDR compliant qualifications enable you to:
- Command higher day rates
- Be first choice for projects in preference to unqualified colleagues (a client is more likely to choose someone who’s got the diploma over someone who hasn’t
- Be far more marketable and employable.
RO exams:
- RO1 – Financial Services, Regulations and Ethics (20 points)
- RO2 – Investment Principles and Risk (20 points)
- RO3 – Taxation (10 points)
- RO4 – Pensions and Retirement Planning (10 points)
- RO5 – Financial Protection (10 points)
- RO6 – Financial Planning Practice (30 points)
All six RO exam passes are needed to attain the diploma in Regulated Financial Planning.
Read more about regulation changes and how they could affect you in the Retail Distribution Review: Independent and Restricted Advice guidance.
For further information please see the table below:
