In response to our article of 25 June regarding the CoreData Research survey on Fees for Service, ASISA commented as follows:
ASISA’s understanding of the pending Retail Distribution Review is that changes are not imminent. During 2011, the FSB sent a letter to ASISA and other industry associations, requesting our views on various questions posed in respect of intermediary remuneration. ASISA submitted extensive comment.
Subsequently, the FSB gave feedback to the effect that a full retail distribution review is underway. They informed us that a discussion document will be issued during 2013 and more consultation will then take place. Thereafter, regulations will be drafted and extensively consulted upon. Once finalized and published, these regulations will provide for a transition period.
The FSB has been at pains to communicate that there will be extensive consultation during the development of the changes. In our various dealings with the FSB, it has been apparent that they have deep understanding of the issues. They have stated that they are aware of the value of advice, and wish to facilitate a sustainable advice environment, whilst promoting fairness for consumers. They do not, at this stage, envisage 100% as-and-when commission on risk products, and they also understand that special attention will need to be paid to remuneration models for advice in the lower income markets.
This corresponds with our views in our article which concluded as follows:
One should refrain from over reacting to all the news currently doing the rounds. Whilst it is interesting to stay abreast of developments, the research being done by the FSB, which will culminate in a discussion paper, is the single biggest indicator of where we are heading.
We welcome the fact that the Regulator indicated that changes to current remuneration practices could not be done on an ad hoc basis, but should form part of a comprehensive remuneration review.