A recent survey of UK investment management firms polled by Bonaire Software Solutions has revealed that the industry is divided on whether the Retail Distribution Review (RDR) will bring benefits or unnecessary costs, although all agree it will have an impact one way or the other.
Seventy-five percent of firms reported that RDR will have a significant to massive future impact on their firm, but the managers disagreed about whether the impact would be positive or negative. More than half of asset managers believe that RDR will improve their businesses, while 30% believe it will restrict business growth.
According to the UKs Financial Services Authority (FSA), RDR will require: advisory firms to explicitly disclose and separately charge clients for their services; advisory firms to clearly describe their services as either independent or restricted; and individual advisers to adhere to consistent professional standards, including a code of ethics. RDR comes into effect Jan. 1, 2013.
Bonaire says 55% of firms believe that RDR will bring much-needed balance to the UK financial services industry, 40% believe RDR will create unnecessary cost.
Clearly, the industry is unsure as to how RDR is going to truly impact their firms and whether the new legislation brings value or cost, says Christopher John, CEO of Bonaire. Our survey results reflect what we are hearing amongst our clients that 2012-13 holds tremendous change for global buy-side firms as a result of regulation.
The survey also showed that most firms are highly unprepared for technology and compliance pressures caused by RDR, with 62% of firms responding that they were either unsure as to their state of readiness or knew they were unprepared.
(CG)