The purpose of this paper is to review the effect of reforms to the UK’s retail advice sector as a result of the Retail Distribution Review (RDR).
Abstract
Purpose
The purpose of this paper is to review the effect of reforms to the UK’s retail advice sector as a result of the Retail Distribution Review (RDR).
Design/methodology/approach
The paper takes the form of a review of the RDR in the context of the Financial Advice Market Review (FAMR).
Findings
There is a lack of clarity, experienced by both consumers and financial advisers, concerning the nature of “advice”. This results from the use of an array of regulatory and non-regulatory terms. Whilst enhancing professionalisation and reducing commission bias, the RDR is failing to address the needs of many financial consumers – identified by many as an “advice gap”. It is argued that the focus of the RDR, and previous reforms, on addressing market failures may be misplaced.
Practical implications
The paper provides an analysis designed to help in the process of developing a retail advice sector that meets the needs of consumers, in the context policy reforms placing more emphasis on the responsibilities of individuals for financial planning.
Social implications
The study has the potential of better outcomes for consumers and reputational returns for the financial services sector.
Originality/value
This paper is a review of the current regulatory issues facing financial advisers and retail consumers in the context of the RDR and FAMR.
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Hanudin Amin, Nor Syakina Jam and Patrick J. Ring
This study examined Muslim civil officers’ cash waqf giving decisions in Malaysia.
Abstract
Purpose
This study examined Muslim civil officers’ cash waqf giving decisions in Malaysia.
Design/methodology/approach
Using the theory of planned behaviour (TPB), the effects of the said factors on the decisions were examined using logistic analysis. A total of 583 Muslim civil officers were involved in this work. The discrete dependent variable measures whether a civil officer is a donor or non-donor cash waqf.
Findings
Results obtained indicate significant influences of attitude, subjective norm, perceived behavioural control and some demographic items on cash waqf giving decisions in Malaysia.
Research limitations/implications
The findings attained were narrowed in terms of chosen geographical settings and the theory used.
Practical implications
This study provides a theoretical benchmark to enhance cash waqf giving decisions, which in turn can affect the waqf collection by the waqf institutions in Malaysia.
Originality/value
This study uniquely develops Muslim civil officers’ cash waqf giving decisions framework (CAGDEF) in measuring cash waqf giving decisions in Malaysia.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2023-0964.
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The Financial Services Authority (FSA) is about to implement wholesale reforms of the regulatory structure of advice in the retail financial services sector. Instead of having to…
Abstract
The Financial Services Authority (FSA) is about to implement wholesale reforms of the regulatory structure of advice in the retail financial services sector. Instead of having to choose between a “tied adviser” or an “independent financial adviser” (IFA) under a “polarised” regime, consumers will have a much wider choice in terms of the range of products and scope of advice available under the new “depolarised” structure. In undertaking these reforms, the FSA aims “to improve consumer outcomes” by dealing with what it argues are market failures in the retail financial services market. This paper assesses whether the FSA’s final blueprint for financial advice can provide the improved consumer outcomes the FSA intends. It critically examines the issues of choice and quality for both products and advice, as well as considering the extent to which the reforms will create the kind of “empowered” consumers the FSA appears to expect. It argues that the reforms may not appreciably address the market failures the FSA sets out to remedy, and suggests that this is due to the likely inability of consumers to understand and take advantage of the new marketplace that is being created. This paper suggests that much greater emphasis should have been placed on financial education and extending the availability of advice before attempting such radical reforms.
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The Financial Services Authority’s (FSA) Consultation Paper 121 suggesting depolarisation in the retail financial services sector has generated a great deal of debate. The…
Abstract
The Financial Services Authority’s (FSA) Consultation Paper 121 suggesting depolarisation in the retail financial services sector has generated a great deal of debate. The motivation for the reforms, primarily to improve the position of the consumer, cannot be disputed. Nevertheless, in attempting such a wide‐sweeping change, it is clear that the reforms could bring difficulties as well as improvements. This paper argues that, to the extent that the current polarisation regime is detrimental for the consumer, this can be addressed without dismantling the basic framework of the current advice system. It acknowledges that there is a need for greater consumer education in this area, and that more needs to be done to address the needs of lower‐income consumers. Nevertheless, it is argued that the advantages anticipated as a result of the more radical reforms in the Consultation Paper are likely to be accompanied by problems that could negate the overall benefit accruing to consumers.
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In the context of increasing private provision of social security and welfare, alongside what is argued to be the ‘financialisation’ of daily lives, individuals in many countries…
Abstract
In the context of increasing private provision of social security and welfare, alongside what is argued to be the ‘financialisation’ of daily lives, individuals in many countries face an array of potentially difficult financial choices and decisions. Limitations in levels of knowledge and expertise may lead them to consider seeking financial advice. Yet, in the wake of the great financial crisis, trust in the financial services industry is low.
At the same time, in a number of countries the financial advice sector is facing its own challenges. These include regulatory issues concerning the definition, suitability and delivery of advice; the affordability of advice; and the challenges and opportunities facing the advice sector as a result of the increasing use of technology in the financial services sector.
This chapter examines the implications of these developments for the regulation and governance of financial advice in the context of Markets in Financial Instruments Directive II. In particular, it considers the example of the UK and issues this raises for the implementation of recent European regulatory reforms.
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For the first time, a UK financial services regulator will have a statutory duty to enhance financial education in the UK. The Financial Services Authority is now beginning to set…
Abstract
For the first time, a UK financial services regulator will have a statutory duty to enhance financial education in the UK. The Financial Services Authority is now beginning to set out in some detail how it will go about fulfilling that duty, and the issues it faces. As well as increasing consumer awareness of the financial industry and improving consumers' ability to identify their financial needs, the FSA aims to enable consumers to decide upon the purchase of financial products through the provision of the FSA's own information and advice — what may be referred to as a form of ‘solution education’. This will place the FSA in a relationship with the general public where the rights, responsibilities and expectations of, and upon, consumers must be made clear and accepted. The inability of the current regulatory regime to establish unequivocally what constitutes adequate or appropriate advice does not augur well.
Weijing He, Patrick Ring and Agyenim Boateng
Over the past decade internationalisation by banks from emerging market economies has accelerated. The purpose of this study is to examine the role of government and home country…
Abstract
Purpose
Over the past decade internationalisation by banks from emerging market economies has accelerated. The purpose of this study is to examine the role of government and home country institutions in the international expansion process of Chinese commercial banks (CCBs).
Methodology/approach
By employing qualitative research method, data was collected via interviews from 30 senior managers based on a sample of 10 CCBs involved in international expansion over the 2001–2013 period.
Findings
The study finds that the Chinese government and home institutions play an important role in motivating CCBs’ internationalisation. Evidence from this research illustrates the effect institutional factors have in emerging economy firms’ internationalisation.
Practical implications
The managerial implication of these findings is that CCBs could take great advantage of government policy by developing proper internationalisation strategies and capabilities that would enhance CCBs’ competitiveness in global market. On the institutional front, removal of the institutional constraints imposed on Chinese banking industry is required. Using market-oriented management and regulatory rules rather than imposing administrative restrictions could therefore accelerate CCBs’ adaption and integration in the international market and enhance their competitive power.