Customers embrace the new rules on fees

L&G claims the new Retail Distribution Review (RDR) rules, which came into place at the beginning of this year, are working well.

It is working closely alongside partners such as Yorkshire Building Society and Leeds Building Society to provide customers with clear advice from their high street branches.

L&G adopted the new rules early and introduced them in mid-November, ahead of the December 31 deadline.

Chris Last, Legal & General’s managing director banks and building society partnerships said: “We have been advising customers under RDR rules for six weeks and have seen over 1,500 people in branches across the UK.

“These customers are clearly happy with the services they’re getting and the business levels we are seeing on the back of these appointments show no change from pre RDR levels.

“The message is that RDR is working on the high street and access to financial advice and services did not end on R-Day, December 31 last year.”

The feedback from customers is that initially they thought they would be paying a lot more money under the new rules.

However, they came round once they realised they had paid similar amounts of money in the past, but it was hidden. This was done by the ISA or savings provider paying commission.

The new rules are designed to make all the costs much more transparent.

Paul Kaye, general manager sales at Leeds Building Society, said: “We know our customers trust us so it’s natural to talk to them about more complex investments.

“The feedback is they like face to face service. Around 70 per cent of our customers are likely to need or want advice. Banks are moving to high net worth individuals and we wanted to make sure we filled the gap.”

He reported no drop-off in customers since the introduction of the new RDR rules on January 1. “I’d advise the customers that banks have left behind to visit a building society,” he added.

Gary Fowler, Yorkshire Building Society’s head of insurance and sales operations, said the regulatory changes are having a huge impact on the investment industry as a whole.

“Fundamentally, this is good news for the customer as it makes the process and the products more transparent, allowing them to choose investments based on value.

“But they may also find that there are significantly fewer options out there. The introduction of RDR has meant that many of our competitors have withdrawn from the market, and even those that remain are generally only offering advice to customers with significant disposable assets, typically around £100,000.”

He added that some people who have already invested in products are discovering that their provider is one of the dozens who have quit the market.

“Here at Yorkshire Building Society we want to ensure that advice on investments remains an option for all our customers regardless of how much they want to invest. We truly think that financial advice should be available to everyone,” he said.

While the initial reaction to RDR has been positive, some commentators believe the RDR rules should be extended further.

Jasmine Birtles, personal finance expert at Moneymagpie.com, said: “We are out of the starting blocks but I don’t think RDR goes far enough. Ideally, I would like to see it cover mortgages and insurance with all advisers being independent.”

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