BB: Product supplier responsibility for tied
advisers
Some elements of product supplier responsibility to be introduced in Phase 2 together with aspects of the enhanced FAIS competency framework, and further elements in Phase 3 together with the final adviser categorisation model.
CC: Product supplier responsibility for multi- tied advisers
Some elements of product supplier responsibility to be introduced in Phase 2 together with aspects of the enhanced FAIS competency framework, and further elements in Phase 3 together with the final adviser categorisation model.
DD: Product supplier responsibility for IFAs
Some elements of product supplier responsibility to be introduced in Phase 2 together with aspects of the enhanced FAIS competency framework, and further elements in Phase 3 together with the final adviser categorisation model.
FF: General product supplier responsibilities in relation to receiving and providing customer related data
See detail in the RDR Phase 1 Status UpdateII: Standards for financial planning / risk
planning fees
To be addressed aligned with implementation of FAIS competency framework
2. Investments
E: Standards for ongoing product servicing
G: Revised standards for investment platformadministration
J: Outsourced services on behalf of product suppliers to be more clearly identified and regulated
Z: Restricted outsourcing to financial advisers
AA: Certain functions to be permitted to beRDR Theme RDR Proposals Phase 1 Phase 2 Phase 3 Comments MM: Remuneration for selling and servicing
investment products
Prohibition on commissions for lump sum
investments to be implemented in Phase 2, and for recurring contribution investments in Phase 3 PP: Commission regulation anomalies on
“legacy” insurance policies
Anomalies regarding variable premium increases and RA transfers to be implemented in Phase 1, as per the RDR Phase 1 Status Update. Further reductions of causal event charges on new and legacy savings products to be phased in over Phase 2 and 3.
QQ: Conflicted remuneration on RA transfers
to be addressed
See detail in the RDR Phase 1 Status Update YY: Remuneration for investment platform
administration
3. Long-term insurance risk
E: Standards for ongoing product servicing
F: Insurance premium collection to be limitedto qualifying intermediaries
J: Outsourced services on behalf of product suppliers to be more clearly identified and regulated
See detail in the RDR Phase 1 Status UpdateZ: Restricted outsourcing to financial advisers
See detail in the RDR Phase 1 Status Update AA: Certain functions permitted to beoutsourced to financial advisers
See detail in the RDR Phase 1 Status Update NN: Remuneration for selling and servicing life
risk policies
OO: Product supplier commission prohibited
on replacement life risk policies
Interim replacement controls to be implemented in Phase 1, as per the RDR Phase 1 Status Update, and remuneration based interventions in Phase 2. RR: Equivalence of reward to be reviewed
Interim equivalence standards to be implemented in Phase 1, as per the RDR Phase 1 Status Update, and full implementation in Phase 3. ZZ: Binder fees payable to multi-tiedintermediaries to be capped
See detail in the RDR Phase 1 Status Update AAA: Commission cap for credit life insurance
schemes with “administrative work” to be removed
RDR Theme RDR Proposals Phase 1 Phase 2 Phase 3 Comments BBB: Outsourcing fees for issuing insurance
policy documents
N/A N/A N/A Proposal not being pursued. See reasons in the RDR Phase 1 Status Update.
4. Short-term insurance
E: Standards for ongoing product servicing
F: Insurance premium collection to be limitedto qualifying intermediaries
J: Outsourced services on behalf of product suppliers to be more clearly identified and regulated
See detail in the RDR Phase 1 Status UpdateZ: Restricted outsourcing to financial advisers
See detail in the RDR Phase 1 Status Update AA: Certain functions permitted to beoutsourced to financial advisers
See detail in the RDR Phase 1 Status Update UU: Remuneration for selling and servicing
short-term insurance policies
Removal of section 8(5) fees to be implemented in Phase 1, as per RDR Phase 1 Status Update, and broader remuneration changes in Phase 2. VV: Conditions for short-term insurance cover
cancellations
See detail in the RDR Phase 1 Status Update ZZ: Binder fees payable to multi-tied
intermediaries to be capped
See detail in the RDR Phase 1 Status Update BBB: Outsourcing fees for issuing insurance
policy documents
N/A N/A N/A Proposal not being pursued. See reasons in the RDR Phase 1 Status Update.
5. Sales execution and other intermediary services
B: Standards for “low advice” distribution models
Some elements of this proposal to be introduced in Phase 2 together with aspects of the enhanced FAIS competency framework, and further elements in Phase 3 together with the final adviser
categorisation model. D: Standards for sales execution, particularly
in non-advice distribution models
Some elements of this proposal to be introduced in Phase 2 together with aspects of the enhanced FAIS competency framework, and further elements in Phase 3 together with the final adviser
categorisation model. H: Standards for product aggregation and
comparison services
I: Standards for referrals and lead generation
EE: Product supplier responsibility for non-advice sales execution
RDR Theme RDR Proposals Phase 1 Phase 2 Phase 3 Comments WW: Remuneration for non-advice sales
execution
Implementation to be aligned with Proposal D XX: Remuneration for referrals, leads and
product aggregation and comparison services
Implementation to be aligned with Proposal H
6. Low income market
TT: Special remuneration dispensation for the
low income market
7. Overarching proposals (proposals that cut across all of the above themes)
GG: Ownership standards to be reviewed to
assess conflicts of interest
Ongoing and aligned with other proposals as appropriate.
HH: General disclosure standards in relation to
fees or other remuneration
Implementation aligned with the introduction of relevant remuneration related standards. JJ: Standards for up-front and ongoing product
advice fees
Advice fee standards in respect of lump sum investments, short-term insurance and life risk replacement products to be introduced in Phase 2, and for remaining cases in Phase 3.
KK: Additional standards for ongoing advice
fees
Advice fee standards in respect of lump sum investments, short-term insurance and life risk replacement products to be introduced in Phase 2, and for remaining cases in Phase 3.
LL: Product suppliers to facilitate advice fees
Advice fee standards in respect of lump sum investments, short-term insurance and life risk replacement products to be introduced in Phase 2, and for remaining cases in Phase 3.
SS: Standards for remuneration arrangements between adviser firms and their individual
advisers
Implementation aligned with final adviser categorisation model and specific remuneration models.
CCC: General standard – no financial interests may be provided by product suppliers to intermediaries unless specifically provided for in the regulatory framework
Possible introduction as a general conduct standard under the FSR Act.
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4. Comments on this document
As explained in Part 1, this document provides a high level status update on the FSB’s approach to implementing the RDR proposals, including process and planned next steps. It is not intended to provide a detailed update on the content of the proposals. Such detail will be communicated and consulted on as the future phases of the RDR implementation process are rolled out. The purpose of this document is therefore mainly for information, and the FSB does not expect comprehensive comment on its contents.
Nevertheless, we welcome any comments or questions for clarification that stakeholders may have. Please feel free to submit these by e-mail to [email protected] or by post to Ms Leanne Jackson, Head: Market Conduct Strategy, Financial Services Board, PO Box 35655, Menlo Park, 0102. Given the purpose of the document, no deadline is set for comments.