The RDR could be detrimental to consumers both in terms of higher product charges and an increase in the cost of advice, warns the Tax Incentivised Savings Association(TISA).
The trade body says implementation costs for the RDR are being "seriously underestimated" and product charges will consequently have to be raised.
Furthermore, consumers face having to pay more for their advice because of the double whammy of a scarcity of advisers and the need to pay VAT resulting from the switch to a fee-based system.
Chairman of TISA's distribution advisory council David Hazelton says the impact on adviser charging could lead to a situation where regular contribution products will no longer look attractive.
"As most consumers have built up their lump sum investments from regular savings this could have the unintended consequence of actually increasing the savings gap."
In an effort to lessen the potential risk to the consumer, the trade association is calling for a risk mitigation strategy to be implemented.
It goes on to say consumers might be discouraged from seeking advice because of the confusing tiers of adviser status.
Hazelton adds although the RDR "will force out the worst excesses of the industry", it also poses risks and he urges the industry to take action.
"We need to identify and face up to the risks now if we are able to ensure the RDR delivers for all customers."
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