Retail Distribution Review: New Paradigm for Investment Services Regulation?

Abstract

The article analyses the consequences of the Retail Distribution Review (RDR) in the UK market and its potential for implementation in other EU Member states. The RDR was launched in 2007 with the underlying aim to improve retail distribution through market-led solutions supported by regulation where necessary. The RDR targeted at three main problem areas: Labeling of advisory service (independent/restricted), Remuneration (including ban on commissions) and Professionalism (minimum qualification and maintaining of knowledge). The article describes the initial situation in the UK investment market, main problems identified by the Financial Services Authority, main building blocks of both the RDR and Thoresen Review of Generic Financial Advice, implementation of the RDR and its European legal dimension. The article further analyses the impacts of the RDR implementation using qualitative analysis. Particular attention is paid to the advice gap as one of the consequences. The article also discusses the possibility of RDR implementation in the Czech financial market. This article reflects state of affairs as per the end of March 2014.