Altus

In March 2010, after two years of consultation and much industry debate, the FSA unveiled its Retail Distribution Review Policy Statement. There have been a few tweaks in response to some intensive lobbying but, in the main, the policy statement has stayed true to the original radical agenda with some fundamental changes finding their way into the rulebook.

Undoubtedly the most radical of these is the ban on commission for sales of retail investment products from 2012. Much has been made of the impact this will have on adviser firms but the consequences are arguably even greater for product providers.

The removal of commission represents a seismic shift in the relationship between manufacturer, distributor and consumer and should lead providers to spend more effort appealing to consumers rather than distributors. Over the next few years we expect to see wholesale changes to the way products are designed, costed and promoted as providers come to terms with the new RDR world.

In the meantime though, providers need to very quickly get to grips with what RDR means for their operations in the short term as they struggle to support 3 models in parallel; commission (on existing business) plus adviser charging in both its pure and provider-funded forms. To do that they will need a clear picture of what happens now and how RDR will alter that picture; whether it be managing schedules of charges or clearing up after cancellations. Unfortunately, for many insurers, such pictures can be very hard to come by.

Altus understand the operational complexity which product providers grapple with and have helped our clients get to grips with it by providing clear pictures of how their business parts fit together. By visualising what happens from the outside-in, we help clients to think through the consequences of change to their business and to highlight potential issues. Click on the Case Study and Service Line links to see how we go about it.