Initially, the number of financial advisers and product sales did fall after RDR was introduced.
In 2015, a study from IRN Research concluded that, between 2012 and 2015, "had RDR not been introduced, another 1.8mn advised product sales would have taken place".
However, it is of course unfair to lay all the challenges of the advice gap at the door of RDR. Since that initial drop the number of advisers has bounced back, and between 2013 and 2021 the number of firms offering retail investment services rose by 11 per cent.
The FCA's Financial Lives Survey in 2020 found that while only 17 per cent of UK consumers with more than £10,000 to invest had most of it in investments, the main reason for the low uptake of advice was that clients did not feel that they would benefit from it.
Encouraging people to take financial advice is a critical barrier to reducing the advice gap.
The FCA has long recognised the problems created by the advice gap and is still working on an effective way to reduce it.
The regulator recently began consulting on proposals to reduce the cost of face-to-face advice for stocks-and-shares ISAs by making qualification requirements more proportionate and allowing consumers to pay for advice in instalments.
However, some have criticised the proposals as being too narrow and only marginally reducing the cost of advice. More comprehensive and extensive measures are expected.
The advice gap is not the only criticism that has been made of RDR. The demand that professionals undertake at least 35 hours a year of continuing professional development training is often cited as an unnecessary burden.
Moreover, how and when some reach that milestone – for example by cramming it all into a week – is evidence for the fact that setting fixed hours requirements does not always drive good behaviours.
Then there is the issue of RDR’s age – at 10 years it is inevitable that some bits of it seem redundant, and that the development of technology requires a new look at some regulations.
For example, advisers must orally explain the difference between independent and restricted advice.
This does not fit well with modern life or the prevailing direction of financial services, which is towards digital, online consumer interfaces.
The rise of FinTechs in particular has made RDR look dated in places. The rules currently make it difficult for FinTechs to offer low-cost, scalable financial advice.
Here, there is an opportunity for the FCA to refresh the rules and make them more compatible with modern life.
In September the FCA announced it would look at the challenges around the boundaries of advice, which has been welcomed by the industry.
