What is RDR?

In the run up to the deadline of the Retail Distribution Review (RDR), Independent Financial Advisors (IFAs) are in the midst of assessing the impact of new regulations and how it will affect the future of the advice they give. From 1st January 2013, IFAs must adhere to the terms and conditions laid out within the RDR legislation thus making their services, fees and qualifications more transparent in order for customers to feel assured about the advice they are receiving. What is the impact of RDR for consumers? There are three main areas where RDR will impact consumers:

1. Advisors will now need to agree their fees with the client who will then pay them directly.  This new system will be known as advisor charging and customers will have the option of either being billed by the advisor or having the charge taken off the top of the investment.  Advisor charging will prevent the advisor from receiving a commission from the investment company, who in the past, would have agreed the fee without involving the client.
2. All IFAs will need to hold a minimum qualification, known as a level 4 and is the equivalent to a diploma.  At present, IFAs can practice after undertaking an exam which equates to GCSE level.  The Financial Services Authority (FSA) has enforced a higher level of qualification to ensure advisors are suitably competent in the advice they deliver.
3. There will also be a clearer distinction between an advisor that is independent or restricted.  An independent advisor promotes a full range of retail investment products while a restricted advisor limits the number of products they advice on.  Firms will need to make sure their status is made clear to clients.

What is the impact of RDR on the mortgage market within the UK? The FSA has confirmed that mortgage advice will not fall under new RDR legislation.  Many IFAs will begin to contemplate their future and perhaps decide upon a move across to the mortgage sector now it is known what the impact of RDR will be. Because of this, experts predict that 2013 will see an influx of mortgage advisors both on a permanent and temporary basis.  Some IFAs may choose to jump across to the mortgage sector for a short period of time while they achieve level 4 status qualifications. Either way, mortgage lending is finally on the increase and this means that soon there could potentially be a wealth of competition in the sector for customers to choose from. How can customers make the right decision? Customers need to seek advice from qualified mortgage experts who have access to a full complement of mortgage products and deals currently available within the market.  Picking the right mortgage advisor will guarantee clients are receiving the best guidance and solutions available to them. Those seeking a mortgage may want to consider liaising with a broker in order to ensure they are introduced to reputable and well established mortgage advisors. At Choice Loans we work with several long established Mortgage brokers, each a specialist in a different field. Depending on whether you are a first time buyer, looking for a Buy to Let, getting an Expat mortgage, getting a Contractor mortgage or getting a Mortgage  over the age of 65 we can refer you to a qualified professional Adviser in your specialist field at no additional cost to you. To benefit from our experience of which Adviser to use, please either complete our Mortgage Enquiry form here or call us on 0845 1260350