The Retail Distribution Review (RDR) will serve to cut the number of independent financial advisers (IFAs) operating in the UK, fear senior insurance executives.

At a debate held by financial consultant Watson Wyatt, 30 per cent of the audience said IFA numbers will fall by more than 25 per cent over the next five years, with seven per cent believing this number will be cut by over half. Forty seven per cent said they would decrease by up to 25 per cent.

Three quarters of the audience of 50 said the RDR will not provide consumers with a clearer understanding of access to financial services products, and two thirds said it will have either no impact or a negative impact on consumer uptake of these products. Fifty seven per cent also said they believe the cost of advice to consumers would increase due to the implementation of the RDR.

Sarah Luheshi, a senior consultant at Watson Wyatt, said that the FSA's feedback statement - issued last November - was generally viewed as "a fudge", as it blurred the lines between sales and advice, "while to others it showed that the FSA had kept its consumer focus by offering a number of routes to market."

"Most people in the industry do not believe consumers will gain a better understanding of how they can access financial services products because of the changes proposed in the RDR," said Luheshi. "Nor do they believe that consumer uptake will increase.

"The great concern is that the RDR involves significant costs but with no or little benefit to the industry or its customers. It appears that the RDR will not achieve the goal of bringing financial advice to a wider market," she concluded.

- Pensions Age January 2009

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