The Retail Distribution Review (RDR) has the potential to be the ‘next financial scandal', despite the Financial Services Authority's (FSA) latest attempts to educate consumers about the reforms, campaigner Gina Miller has warned.
Earlier today, the regulator issued a six-page leaflet on the RDR, explaining the changes and emphasising the fact that, with commission, advice has never been free.
However, SCM co-founder Gina Miller, who heads the True and Fair Campaign, is still predicting a large-scale exodus of away from financial advice, with consumers expected to be left disenfranchised.
"The RDR is the next financial scandal waiting to happen," she said. "Millions of people risk being further alienated by the financial services sector at a time when more should be done to engage with potential savers and investors.
"Many middle-income investors will no longer have access to financial advice because many advisers are now closing or putting up minimum charges/amounts invested as they target the more lucrative high-net worth investors who will be prepared to pay for advice."
She also said that, despite the aims of providing more transparency for investors, the RDR will fall short because it will not provide consumers with all the costs and fees behind their investments.
"While consumers will know how much financial advice will cost, RDR does nothing to demonstrate the value that an IFA can bring in helping consumers choose the most appropriate product for their needs," she added.
The campaigner said investors would remain "in the dark" or have to be "a sleuth" to calculate the total management costs (including full dealing cost and performance fees) because the FSA had allowed them not to be included in the published numbers.
Lack of innovation for solutions
Some 2,000 consumers affected
Achievements, charity work and other happy snippets
Appetite has suffered since Brexit vote
'Failure to pay attention can result in enforcement'