Retail Distribution Review

Written evidence submitted by Nikhil Chauhan

I am writing with regards to the implementation of RDR.

I believe the requirement for an increased level of qualification can only be seen as positive move for the industry; it is my personal belief that the qualification should be uniform amongst all advisors and no concessions should be made for those working within the High Street Retail Banking Industry (especially as their client base is substantially larger than those from private practices and therefore their advice will have a greater impact the wider society, than those from private practices).

That said, I believe there to be many fundamental flaws with regards to the change in re-numeration – without doubt I fear that this will affect a great number of consumers and the affordability of key financial products which are already under supplied.

It is already no secret that there is an increasing Protection, Savings and Retirement gap for many individuals and therefore it is my belief that the area of financial advice should be more openly available to the retail client rather the current proposal - which I believe would price those most in need out of the market.

If it is felt that remuneration patterns should be made more clear or should be more uniform then I believe it should be done via another method; for example:-

All providers of investment must pay the same commission to the advisor when investing for the same term and amount (for example a client who wishes to invest £20,000 for 10 years will result in a payment of £x commission irrespective of which provider has invested the funds for the client).

This would mean the follow:-

1. The client can be certain they have not just been offered the product which offers the best commission payment to the advisor.

2. Uniform payment method amongst advisors within the whole industry will result in increased competition amongst product providers – creating an incentive for providers to monitor costs and increase service levels.

3. The above proposal will not price clients out the market as the current RDR proposal may well do.

4. Standardised payments makes it easier for the client to understand how they are paying for the service their advisor is providing.

Above, is just one of many possible options available to improve and standardise the method of payments and charges within the industry.

I strongly believe that the current RDR structure will create a long term Macro-Economic disaster for this government’s fiscal policy and will exponentially worsen the current pension crisis.

I believe what should be of primary consideration is the potential cost of rectifying any possible failure of RDR.

January 2011