The Retail Distribution Review ("RDR")
On 31 December 2012, the UK Financial Conduct Authority (“FCA”) changed the rules about how Financial Advisers describe their services and the way UK consumers pay for them. These changes are commonly referred to as the ‘Retail Distribution Review’.
To help our customers understand exactly what RDR is or how it may affect you, we’ve put together a brief summary of the changes. Download our Q and A document.
What is RDR?
The Retail Distribution Review (commonly referred to as RDR) aims to ensure financial products and services delivered to clients are clear, transparent, and meet their needs. Another aim is to promote standards of professionalism that inspire consumer confidence and build trust. RDR aims to achieve a better experience for investors by ensuring that investors are being properly and fairly guided by their financial advisers.
A set of changes has been introduced to achieve these aims.
What changes have been made?
> Clearer charges: through the introduction of a transparent charging system, RDR aims to remove the potential for any commission bias from any advice given by financial advisers
> More professional advice: advisers are now required to hold a higher level of qualifications. These improved threshold qualifications should ensure a consistently high quality of advice for clients
> Clearer services: so investors understand explicitly the type of advice offered, be it independent or non-independent.
How does this affect your investment with First State Investments?
The impact of the Retail Distribution Review is different dependent upon how you invest with First State Investments.
If you invest directly without a financial adviser
If you invest directly with First State Investments and do not have a financial adviser, RDR will not impact your investment and there is no change to how you invest.
From 31 December 2012, any investments or regular savings payments you have made into your account will not incur an initial charge, unless you invest into any of our soft-closed* funds. For funds that are soft-closed, an initial charge of 4% will still apply.
* Soft-closed funds are funds that have ceased to take any new investment in order to protect existing investors.
If you invest with a financial adviser
From 31 December 2012 we are not allowed to pay financial advisers commission on new advised lump sum investments or top ups in respect of UK retail clients, and therefore, regardless of whether you are a UK client or not, we do not intend to apply any initial charges except for funds which are soft-closed. For funds that are soft-closed, the initial charge of 4% will still apply. Please note that in the case of soft-closed funds the full fee will be retained by First State Investments and none of this charge will be passed to your financial adviser as commission. Any trail commission** currently paid to your financial adviser continues on the same basis after 31 December 2012 subject to FSA regulations, unless you instruct us to stop it.
If your financial adviser is dealing for you without providing financial advice, they may still be able to receive initial commission of up to 3%. If this is the case we will apply to your investment an initial charge equal to the amount of commission requested by your financial adviser.
** Trail commission is payment made to advisers on an ongoing basis after you have invested.
Where can you get more information?
All enquiries to First State Investments should be directed to firstname.lastname@example.org or by calling the Client Services team on 0800 587 4141. You can also download our Q and A document..
Financial advisers will have already prepared for changes introduced by the Retail Distribution Review and will be well placed to explain how the changes will affect clients and their investments. Therefore clients can also direct any queries or comments in relation to RDR to their financial adviser.
First State Investments offers a range of ‘clean’ share class ready for retail investment after the RDR comes into force. Although these shares are not generally accessible to direct retail investors, they may be accessible to retail investors via fund platforms.
The share classes carry an annual management charge net of any fee payable to financial advisers or fund platforms.
How to invest
You can invest in our Funds on the following Platforms:
|Aegon||Cofunds limited||Legal and General (IFA Platform)||Old Mutual||Transact|
|Ascentric||Fidelity Funds Network||Legal & General International (IFA platform)||Prudential Life UK||Zurich Assurance Limited|
|Aviva (UK Pension Platform)||Friends Life / Pensions||MetLife||Raymond James|
|AXA UK||Hargreaves Lansdown||Novia Financial||Scottish Widows|
|Bestinvest||James Hay||Nucleus Financial||Standard Life / FNZ Wrap (UK) Limited|
**Platforms serving private investors
Who/how to contact?
Client services: 0800 587 4141
Dealing line: 0800 587 3388
If you are calling from outside the UK please call: +44 (0)131 525 8870