RDR latecomers: Start here

There’s still time to get your firm in order for RDR. Rebecca Thorpe, principal at Bovill, offers her guide to meeting the requirements.

The RDR professionalism rules are not just about exams – they reflect the increasing emphasis the FSA is placing upon firms to ensure that individuals are and remain competent to perform their role.

Unsurprisingly, there are various actions which firms should have addressed already or be considering now. Here are our top six.

1. Establish a project team (involving all parts of the business) to address the issues arising from the RDR professionalism rules

The firms that will be best placed to meet the RDR rules and requirements will be those that have performed a detailed impact analysis against their specific business model and regulated activities. This exercise should not just be seen as a compliance obligation.

The rules affect many HR aspects of registered investment advisers (RIA), impacting on a firm’s recruitment processes, criteria for achieving and maintaining competence and reward and remuneration structures.

2. Identify all individuals falling within the definition of RIA

This may not be as straightforward an activity as it first sounds, particularly for those firms undertaking discretionary investment management activity. The activity ‘managing investments’ (discretionary business) is not covered by the RDR professionalism rules, but before firms ‘carve out’ discretionary managers from the RDR professionalism obligations, they need to carefully review how the discretionary manager interacts with retail clients and ensure none of the actions could be construed as performing the activity of providing advice on retail investment products, securities or derivatives.

3. Undertake an audit of exactly what qualifications each RIA has obtained

The list of appropriate / approved qualifications for RIAs has grown over the course of the RDR professionalism consultation process. As such, the final list is a fairly sizeable tome. Particular care needs to be exercised when undertaking an analysis of qualifications held against the list, due to the fact the syllabus may have evolved somewhat over the years. A level 4 qualification if taken in 2010 may require a significant amount of gap-fill activity if taken two or three years earlier.

Details sought should include the title of examination, date of the examination and the name of the awarding body. If further examinations are required to be taken, time is rapidly running out in terms of registering for sittings and this should therefore be a priority.