Consumer Panel welcomes Retail Distribution Review, but still believes FSA may need to end commission

27 June

The Financial Services Consumer Panel today congratulated the FSA for publishing the Review of Retail Distribution Discussion Paper which is important and timely. The Consumer Panel has said that if the right changes are made, it could be the most important thing that the FSA has done for consumers.

The Retail Distribution Review (RDR) has taken a comprehensive look at the current UK financial services marketplace and the possibilities for improvement. The Panel is pleased that the Review has looked at how to improve the standards of training and competence for advisors and the impartiality of the advice they give.

However, the Panel is concerned that the options proposed by the FSA would create new categories of adviser when there are already so many different types of adviser in the market place. This does not make it easy for consumers.

On the future of commission, the Chairman of the Financial Services Consumer Panel, John Howard, said:

"The FSA has acknowledged that ending commission payments to advisors is a possibility, and the Review suggests the remuneration model we have been advocating of Customer Agreed Remuneration or Factory Gate Pricing as an alternative. However, the industry may need the FSA to take more of a lead on ending commission. We doubt whether the industry can move to a new system of its own volition, as there is little advantage to the first movers in the market place."

Notes to editors

1. The FSA established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA’s performance in meeting its objectives. The Consumer Panel has statutory status.
   

2. The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit. More information about the Panel's work is available on this website.
   

3. The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.
   

4. There are currently twelve members of the Panel as listed below.

   John Howard (Chairman)
   Adam Phillips (Vice Chairman)
   Kay Blair
   Michael Chapman
   Stephen Crampton
   Caroline Gardner

   Jenny Hamilton
   Tony Hetherington
   Nick Lord
   David Metz
   Lindsey Rogerson
   Carol Stewart