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Changes to financial advice

The Financial Services Authority (FSA) has recently updated UK financial regulations by introducing the Retail Distribution Review (RDR). The changes to regulations introduced recognise professional financial advice is a valuable service in its own right.

We welcome the drive to higher professional and educational standards required for financial advisers providing advice on investment products across the financial services industry.

Our face to face advisers are all professionally qualified, giving you the reassurance that they’ve obtained and adhere to industry recognised professional, educational and ethical standards. So you can have peace of mind that they’ll provide advice that’s right for you.

Frequently asked questions

When did the Retail Distribution Review come into force?

31st December 2012

Why has RDR been introduced?

The FSA has introduced RDR to increase confidence in the advice customers are given on investments and pensions and improve standards across all providers of financial advice. It’s one of the most significant changes to the financial services industry within the past 20 years.

What’s changed?

  • Charges: Financial Advisers agree charges with you directly and before you take out any investments, instead of being paid by commission from the charges through the investment product you buy.
  • Professional advice: Financial Advisers meet higher standards of qualifications, keep knowledge up to date with evidenced annual training, sign up to an ethical code requiring them to continue to treat you fairly and maintain a Statement of Professional Standing (SPS) issued by an accredited body such as the Chartered Insurance Institute.

What’s the benefit to me?

  • Continued confidence and trust in the advice you have received as you’ll know it’s been recommended to suit your needs.
  • From the very beginning, you’ll understand exactly what you’re paying for investment advice. What you’ll pay for investment advice will no longer be included within the charges of the investment products that you buy.
  • You’ll get comfort that you’re receiving professional advice at all times.

Will this affect all of my products with Scottish Widows?

It won’t impact your existing products but may affect future increments to your products. Individual pensions, ISAs, OEICs and annuities are included in the review. Protection products are not impacted by this regulation.

Why am I now going to be charged for new advice?

Advice has never been free. It’s usually been paid for from product charges. However, the new rules mean advice charges for pension and investment products need to be set out and agreed separately from the product charges, making things more transparent for you. However you will continue to only be charged if you purchase a product.

So what can I expect to be charged?

This depends on what you agree with your financial adviser. If you receive advice from a Scottish Widows adviser, the following menu of charges will apply.

Customer scenario Proposed adviser charge
Standard charge for financial planning advice – new single customer £650
Standard charge for financial planning advice – existing single customer £450
Standard charge for financial planning advice – new joint customer £850
Standard charge for financial planning advice – existing joint customer £600
Additional charge per ISA transfer (from external source) under consideration £100
Additional charge per pension transfer under consideration £150
Additional charge for each pension fund converted into annuity £100
Additional charge per product for Inheritance Tax planning £150
Additional charge for complex retirement planning – annual / lifetime allowance £150
Annual charge for Income Drawdown/Phased Retirement annual reviews £300

NB. A discount of £100 will apply if a protection policy is recommended and set up in addition to a pensions or investment product, or where you receive advice on joining or making increment to a group pension plan which was set up before 31st December 2012.

What type of advice will I receive from my Scottish Widows adviser?

We offer professional information, guidance and advice on Scottish Widows products to draw up a complete plan for your future. Your financial adviser will spend time understanding your goals and identifying any gaps in your current financial planning. A tailored financial plan will then be developed to suit your needs.

Scottish Widows Direct can help you with:

  • personal retirement planning
  • retirement income planning
  • a review of your financial planning needs
  • protection for your current financial situation and your family needs
  • your saving and investment options
  • mitigating any potential inheritance tax liabilities.

Our advisers can also provide solutions to any protection, retirement planning or investment needs relating to your business.

How do I know that my adviser is qualified?

Firms are required to individually assess and authorise advisers and they’re accepted as approved by the FSA. All Scottish Widows Advisers are qualified and authorised to provide financial advice.

Want to find out more?

If you’d like to discuss RDR and how it affects you, or have any questions on any aspects of financial planning, please contact your financial adviser. If you don't have a financial adviser, please call us on 0845 608 0372 to make an appointment with a Scottish Widows adviser.

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