Report: Evaluation of the impact of the Retail Distribution Review and the Financial Advice Market Review

The Financial Conduct Authority (FCA) has published an evaluation of the impact of the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR). 

Both the RDR and FAMR sought to improve the distribution of retail financial services products, and the FCA committed to evaluate their impact, and to test whether they delivered their desired outcomes.

The aim of the RDR was to establish a resilient, effective and attractive retail investment market that consumers had confidence in and trusted. The objective of FAMR was to identify ways to make the UK’s financial advice market work better for consumers.

Key findings

The evaluation found evidence of some improvements in the market since the conclusion of FAMR:

  • approximately 8% (4.1m) of all UK adults have received financial advice, an increase from 6% (3.1m) in 2017
  • adviser numbers are up from 35,000 in 2012 to 36,400 in 2019 (4% increase)
  • the creation of the FCA’s Advice Unit has helped firms to develop new automated advice models (it has received 137 applications for support, with 65 accepted)

The evaluation also found that while more consumers are getting the support they need, further innovation could help even more consumers make better use of their finances.

  • Many consumers are still holding money in cash that could be invested to provide potentially higher returns, but they have not sought or received the help with their finances that would help them to make better investment decisions.
  • The industry offers a range of services but there is significant clustering around certain service types and price points. More innovation in services can help drive greater competition between firms across the market. 
  • More tailored guidance services and simpler advice services could help to attract more consumers towards the help they need.